India plans to sell cotton to BD to trim record reserves

State-owned Cotton Corporation of India (CCI) may export 1.5 million to 2 million bales of cotton fiber to Bangladesh to help reduce India's record surplus before the new crop begins arriving in October, Indian media said quoting CCI Chairman Pradeep Kumar Agarwal
CCI generally sells cotton to local mills and traders at market prices, after buying from farmers at government-set minimum rates.
Higher sales from India may potentially increase reserves in top exporters like the US and Brazil and further lower global prices that have fallen about 8% this year as the coronavirus erodes demand for clothing.
Global cotton consumption is set to drop about 15% from a year earlier to 22.29 million tons in 2019-20, according to the USDA estimates.
Indian media said export prices will be decided by the two governments using the Cotlook index, Agarwal said. Industry researcher Cotlook Ltd.'s benchmark is a daily average of the five cheapest cash prices in the world."In any case, I can assure that it won't be lower than domestic prices, which have fallen about 20% since the outbreak of the coronavirus," Indian financial daily Live Mint quoted Agarwal as saying.
CCI plans to sell 500,000 bales to 700,000 bales of 170 kilograms each to Trading Corp. of Bangladesh in the marketing year ending on Sept. 30.
The rest of the quantity will be shipped in 2020-21, Agarwal said in a phone interview. Bangladesh vies with China as the world's biggest buyer of cotton, said the Delhi-based financial daily.
India is likely to have a record closing stockpile of 10.25 million bales by Sept. 30, according to the Cotton Association of India, as domestic consumption may drop more than 20% from a year earlier to 25 million bales in 2019-20, it said.
CCI bought 10.5 million bales this year, the highest-ever procurement. It included 2 million bales purchased during a nationwide lockdown to prevent distress selling by local growers, Agarwal said. The company is carrying about 8.4 million bales at present and its ending reserves may not exceed 3 million bales on Sept. 30, he said.
CCI spent about Rs 5,500 ($74) per 100 kilograms to purchase cotton from farmers, compared with the market rate of Rs4,800 to Rs5,000, he said.
Indian farmers have planted cotton in 12.55 million hectares (31 million acres) as of Aug. 14, compared with 12.16 million hectares a year earlier, according to the farm ministry. The crop will be harvested from October, said the Live Mint.