Cotton farmers are not selling their crop

Indian traders are struggling to export cotton despite higher production as farmers are delaying sale of their harvest hoping for higher prices in coming months, industry officials said.

The limited supplies are keeping local prices significantly above the global benchmark, making overseas sales unviable from the world’s biggest producer of the fibre. “Harvesting of the new crop started last month, but many farmers are not willing to sell. They are holding crop hoping prices would rise like the last season,” said Atul Ganatra, president of the Cotton Association of India.

Farmers received record prices for their last season’s crop, but the new crop is unlikely to get the same prices as local production has risen and global prices have fallen, Ganatra said.

Cotton prices hit a record high of Rs52,410 (Dh2,355) per 170kg in June, tracking a rally in global prices and as production fell. But prices have corrected nearly 40 per cent from the peak.

Despite higher output, spot markets were receiving nearly a third lower in supplies than normal, industry officials estimated. India traders so far in the new season have contracted 70,000 bales for the exports, significantly lower than more than 500,000 bales contracted during the same period a year ago, said a dealer with a global trading house.