The government would cap cotton export registration at seven million bales in the current marketing year through September 2013, and may consider whether to allow more after the ceiling is breached.
Last week, a ministerial panel decided the exportable surplus of seven million bales ? as has been determined by the state-backed Cotton Advisory Board (CAB) ? would be adehered to in the registration of shipment contracts during 2012-13, a senior government official told FE. The panel comprised agriculture minister Sharad Pawar, finance minister P Chidambaram and textiles and commerce minister Anand Sharma.
To facilitate exports, the ministerial panel also decided to relax cotton shipment registration rules. Traders can now export up to 30,000 bales of cotton against each contract, compared with 10,000 bales. The panel decided to meet again in the second week of January 2013 to review the cotton supply situation.
India, the world’s second-largest cotton supplier, exported a record 12.9 million bales in 2011-12 when global prices hit record levels as top user China ramped up purchases. However, global prices started crashing since late last year as biggest importer China was expected to trim purchases by more than a half to 2.12 million tonnes in 2012-13 from 5.34 million tonnes last year due to swelling inventories there, according to the International Cotton Advisory Council. In a contrast, a depletion of stocks in India following record exports in 2011-12, have kept domestic prices higher than the global levels, despite a fall below the state-fixed benchmark rates in many regions.
While global prices have tumbled by more than 66% to 73.42 cents per lb on Thursday since hitting an all-time-high of $2.197 an lb in March last year, a comparable Indian variety was ruling around 79 cents.
Trade executives say if global prices stay at such low levels, exporting even seven million bales would be a tough task. China accounts for around 80% of India’s fibre supplies, and lower imports by the communist nation in 2012-13 would drag down India’s export revenue from cotton that earned the most among farm commodities last year.
Cotton export registrations have touched around 500,000 bales so far this year, the trade sources said, way below the level witnessed a year before. The country’s cotton output is forecast at 33.4 million bales for 2012-13, down 5.1% from a year before, as key producing reasons of Gujarat and Maharashtra received poor monsoon showers this year. Consumption by domestic mills is pegged at 25 million bales, according to the CAB.
