The government is unlikely to curb cotton exports in the year through September 30 despite the Cotton Advisory Board trimming the output forecast by 3%, or 1.1 million bales, sources said on Wednesday.
India, the world?s second-largest cotton grower as well as supplier, had decided to free shipments from restrictions in 2011-12 on expectations of a record harvest. The government had kept an export ceiling of 5.5 million bales for 2010-11 before raising it to 6.5 million bales in early July and finally lifting the restrictions later that month as domestic prices had eased from their record highs in March and April.
On Tuesday, state-backed CAB trimmed cotton harvest forecast for 2011-12 to 34.5 million tonne as diseases in the cotton crop have hurt yield in key states.
Production in Maharashtra may be 6.9 million bales, 19% lower than the 8.5 million bales estimated in November, while output in Andhra Pradesh may tumble by 13% from the forecast to 4.8 million bales, Textile Commissioner AB Joshi said. Maharashtra and Andhra Pradesh are key cotton growers after Gujarat.
Some textile mills have been demanding restrictions on cotton exports to make domestic supplies of the key raw material ?more affordable? to help them cope with a slowdown in shipment demand for textile products due to the global macro-economic crisis.
?Even after the cut in forecast, cotton production will still be higher than last year level of 32.5 million bales. Although there is a fresh pick-up in mill demand, it doesn?t warrant any curb on exports as of now because domestic prices are at reasonable levels,? said a government official, asking not to be named.
Domestic cotton prices have tumbled by close to a half to R37,000 per candy, of 356 kg each, since April when a global shortage had driven up prices to near record levels.
Demand for the key raw material from textile mills will likely climb to 24 million bales from 23 million bales estimated earlier, dragging down domestic stockpiles by 2.3 million bales from the previous forecast to 5.5 million bales, according to the CAB. ?Mill usage will rise as yarn prices have started looking up in the last one month, while cotton prices have been stable,? Joshi said.
?I don?t think there is a need for any kind of export restrictions now, although some mills may be demanding it. Prices are at reasonable levels, so that?s a good news for consumers. Meanwhile, Chinese purchases from India are set to pick up, which will ultimately boost returns for farmers. So a restriction won?t serve anybody,? said a senior executive at a big trading house in Mumbai.
Cotton arrivals in the domestic market picked up pace in the week through January 15 after more than three months, triggering big purchases by textile mills and traders to cater for off-season demand. Arrivals fell by 16% to 13.52 million bales until January15, recovering from a 20% decline until the previous week, state-run Cotton Corporation of India said last week.
?At present, exporters are active in covering cotton for adhering to the shipment schedule. With deterioration in the quality of present arrivals, picking up of demand for yarn and reports of a smaller crop, domestic mills have also become active in covering cotton requirements both for immediate and lean season requirements. Hence it is felt that the cotton prices may rule steady to firm in the coming days,? the corporation said in a report.
