Price rise could delay cotton exports

Written by Agencies | Mumbai | Updated: Sep 28 2010, 14:59pm hrs
Major producer may delay cotton exports by two weeks to mid-October because of dwindling stockpiles and poor arrivals of a new crop, industry officials said, potentially spurring global prices.

India, world's second biggest producer, was expected to start exports from October 1 with a cap of 5.5 million bales for 2010-11 season, trade secretary Rahul Khullar said earlier this month.

Earlier this month, India delayed registration of cotton for export to October 1 from September 15, after the textile industry raised concerns over gains in local prices. Agriculture and textile ministry officials are slated to meet on Tuesday to decide export quantities for the 2010-11 season and when that quantity should be shipped. Considering arrivals from the new crop, I think the government is unlikely to allow exports from Oct. 1, said an official at the Cotton Advisory Board (CAB), a federal body drawn from farmers, industry groups, traders and the government.

If they allow exports, local millers and exporters will fight for limited supplies and will push up prices further, which no-one wants, the official added on condition of anonymity.

In India, the price of the most common Shankar-6 variety was Rs 37,700 ($837.8) per candy (of 356 kg each) on Saturday, up over 68% from a year ago. The price hit a record high of Rs 38,500 earlier this month.

Cotton futures in New York rose to a fresh 15-year high last week on investment and mill buying, and analysts said most of the price push has come from speculative funds that expect cotton prices to move higher if bad weather hits top producers China and Pakistan.

About 60% of India's current season shipments have gone to China, the world's biggest consumer. The CAB expects India to begin the 2010-11 year with opening stocks of 4.05 million bales, down over 43% on a year ago.