May 3, 2012

India's cotton export demand rises

Export demand for Indian cotton begun to rise following the central government's permit for cotton export, which pushed up the cotton price by INR200-300 (US$3.77-$5.66) per candy in Gujarat on Tuesday (May 1).

Gujarat Sankar-6 cotton price was increased to INR34,500-35,000 (US$651.25-$660) per candy of 356 kg. Kalyan variety cotton was traded on INR25,500-26,000 (US$471-$490) per candy.

About 15,000-18,000 bales cotton arrived in Gujarat and 85000 bales arrived in India.

The government had yesterday decided to allow further cotton exports for 2011-12 marketing year ending September, on the back of higher production estimates.

Rajkot based cotton broker said, "Export demand has increased in past two days and mills are also buying. For a short term cotton price will move upward and during this week it may reach to INR36,000 (US$679) per candy.

India has asked the state-run Cotton Corporation to maintain a buffer stock of one million bales between June and August, a government statement said Monday. It said the buffer stock is to be used for supplying local textile mills in case they faced a shortfall.

Meanwhile, the textile industry feels that the government's decision to allow cotton exports will lead to a rise in its prices and a decline in domestic availability, the industry said today. The textile sector also fears that the rising cotton prices would put further pressure on margins of companies which have still not come out of their sluggish phase.