India permits cotton shipments from Nov 1, cooling global prices
October 1, 2010

Contributing significantly to global supply, and thereby bringing scorching international prices of cotton down, India the second largest producer and supplier of cotton, has said it will allow shipments starting November. 1. India had earlier lifted the ban on exports of raw cotton but had brought in a license system to measure demand and exports of cotton. According to India’s ministry of Textiles, suppliers can now register shipments starting October. 1 to export as much as 5.5 million bales of 170 kilograms each. India’s announcement also come at a time when the China Cotton Association cut its 2010 cotton output estimate to 6.7 million tons from a previous estimate of 6.96 million tons, citing lower yields.

The fresh stock of cotton from India is expected to boost not only India’s cotton export market, of which China is the largest but also its domestic market and relieve textile merchants of the burden of high prices.Last April, domestic textile producers had protested against dumping of cheaper Chinese textiles in India and had called for imposition of an export duty of 2,500 rupees (US$56.47) a tonne on all varieties of raw cotton in order to cool domestic prices.

Further, the harvest in India may be less than forecast because of an extended monsoon season. Production in the year from Oct. 1 may be less than the 32.55 million bales estimated by the state-run Cotton Advisory Board last month. Output this year is estimated at 29.5 million bales, according to the board.

Cotton futures have also risen significantly after China Cotton Association said demand in the top producer and user of the fiber exceeded output by 3.6 million tons in the year ended August and the U.S., the largest exporter, said local crop conditions deteriorated.

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