May 10, 2012

India's cotton exports up after export sales resume

After the government allowed export sales to resume, India could ship up to two million additional bales of cotton in the current crop year, reaching a record 13.5 million bales, a trade association said on Wednesday (May 9).

Last month, India reversed a ban on cotton exports imposed in March as concerned eased that supplies would fall short for the textile industry, the country's second largest employer, allowing firms in the world's second-biggest producer and exporter to resume shipments abroad.

"We can export 1.5-2 million bales more as demand from neighbouring Bangladesh and other southeast Asian countries is very good," Dhiren N. Sheth, president of the Cotton Association of India, told Reuters in a telephone interview.

India has already shipped 11.5 million bales of 170 kilogrammes each in the current crop year ending in September, according to data from the Cotton Advisory Board (CAB).

The March ban came as exports raced ahead of initial government estimates of 8.4 million bales as China, the main importer of the fibre, filled state reserves.

The estimate by Sheth would bring shipments abroad to a record 13.5 million bales, nearly 54% higher than the previous record 8.8 million bales in 2007-08, putting pressure on depressed global cotton prices, traders said.

The farm ministry has estimated 2011-12 cotton output will touch a record 35.2 million bales, higher than the CAB's estimate of 34.7 million bales.

With a carry-forward stock of around four million bales, the total availability in the current year stands at 39.2 million bales, while domestic cotton consumption is estimated to fall to 25.2 million bales from 26.7 million bales in the previous year, according to CAB data.