Despite this bright prospects for exports the cotton trading community is not too sure whether it will be able to take advantage of this situation NYCE since the past couple of weeks. Private sector cotton traders find themselves at the mercy of the government which may or may not divert the balance of four lakh bales of cotton export quota (of the five lakh bales targeted for the cotton year ending September 2000).

Cotton exports are not under open general licence (OGL) and are possible only through the export quota given mainly to the state owned institutions like Maharashtra Cotton Growers' Federation (Mahacot), Cotton Corporation of India, Spinfed and others.

For various reasons, including low quality and high prices of Indian cotton, these institutions have not been able to meet this year's cotton export obligations of five lakh bales. Instead, only one lakh bales of cotton have been exported this year.

Given the prospects of higher cotton crop from the new cotton season beginning October 2000, Indian cotton prices are likely to depress further as can be seen from the sliding quotations of Indian Cotton Contract (ICC) on the East India Cotton Association (EICA).

Against the spot cotton prices of Rs 4,893 per quintal on Friday, the December delivery ICC was quoted sharply lower at Rs 4,346 per quintal. Even the February 2001 delivery ICC, quoted at 4,343 per quintal, is said to be on the higher side which with the arrival of fresh cotton from October onwards, the prices are likely to slide further. The September delivery ICC closed Rs 21 lower at Rs 4,737.

On the other hand, the NYCE cotton quotes for the December delivery have jumped by over 10 cents per lb to around US65 cents from under US55 cents in early-July, majority of this jump has been seen over the past one week."The cotton year is about to end by September, and with it the export quota for 1999-2000 will also lapse" lamented a cotton trader.

"The government has not announced any export quota for the next cotton year beginning October. It is this silence of the government which is disturbing the cotton trade community which is not able to take advantage of the opportunities available in the cotton trade".

As in the past, the central government must now divert the cotton export quota from the institutions to the private trade, said a leading cotton trader requesting anonymity. "If this is not possible, the cotton exports should be put under OGL at the earliest, failing which we will not be able to export cotton at this opportune time and India will lose a good opportunity to earn sizeable amount of foreign exchange".

Hoping that the government will soon relax its position on cotton exports, a section of cotton trading community has already begun inquiring their associates in various countries about the prices at which the importers will be willing to import Indian cotton, perceived to be of lower quality.in the world markets.

Mahacot again floats tenders for exports
Maharashtra Cotton Growers' Federation (Mahacot) has once again floated its tender on Friday inviting bids for its huge cotton stock of around 13 lakh bales. It's earlier attempt at exporting cotton failed in mid-June this year. The bidders had then offered to buy Mahacot cotton at Rs 2,000 cheaper which it had rejected.

Thanks to the depreciated rupee, this time, the average price for Indian cotton is said to be cheaper by around Rs 1,200 per quintal against the imported cotton. This has prompted the Mahacot to float global tender last week.

"This time, we are hopeful of cotton exports", said Mahacot managing director Sunil Porwal. On the other hand, CCI officials say, with the current cotton season coming to an end, they have no cotton left to take advantage of export prospects. "Currently, there are no stock of good cotton that can be exported", said a top CCI official. "However, if the current situation-weaker rupee, low cotton prices in India, strong international cotton prices on NYCE - continues till November-December we will consider cotton exports".