Mumbai: 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 told Reuters.
The limited supplies are keeping local prices significantly above the global benchmark, making overseas sales unviable from the world's biggest producer of the fiber.
"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 (CAI).
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 rupees 52,410 rupees per 170kg in June, tracking a rally in global prices and as production fell. But prices have corrected nearly 40% from the peak, Reuters reports.
"Last year we sold raw cotton at 8,000 rupees (per 100kg) and later prices jumped to 13,000 rupees," said Babulal Patel, a farmer from western state of Gujarat, the country's biggest cotton producer. "This year we are not going to repeat the mistake. We are not going to sell below 10,000 rupees," he said.
Farmers used proceeds from the last few seasons' harvests to create storage facilities, which they are using to store the crop, Ashwini Bansod, head, commodities research at Phillip Capital India Pvt Ltd, said.
Despite higher output, spot markets were receiving nearly a third lower in supplies than normal, industry officials estimated.
India could produce 34.4 million bales of cotton in the 2022/23 season that started on October 1, up 12% from a year ago.
India traders so far in the new season have contracted 70,000 bales (1 Indian bale = 170kg) 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.
Bangladesh, Vietnam and China are among the key buyers of Indian cotton.