India eases cotton export ban, markets await more
Posted by Labels: Bans and Sanctions, Cotton, India, PoliciesIndia’s commerce ministry said on Friday it would allow cotton cleared by customs before March 4 to be exported, easing a controversial blanket ban the world’s second largest producer had imposed this week and which had fired international prices.
India unexpectedly banned exports on Monday to ensure adequate supplies for the domestic textile industry in the face of strong demand from its biggest customer China.
But Farm Minister Sharad Pawar demanded the ban be lifted, saying it hurt cotton farmers, while China’s cotton industry association said the ban was “irresponsible” and would disrupt the global market.
The commerce ministry statement was issued ahead of government talks on Friday to discuss the ban. Government sources have said India may decide to allow limited exports of cotton to cover existing sales commitments at the meeting.
Cotton prices were largely unchanged after the announcement. The key March cotton contract on India’s Multicommodity Exchange was trading flat at 16,830 rupees per bale of 170 kg. The benchmark New York cotton future on ICE was trading up 0.69 per cent at $0.9 per lb.
Exporters welcomed the decision, even though it only affects a small amount of supplies destined for overseas sales.
“This is a welcome step from the government and this will allow export consignments which have been cleared by the customs authorities,” said Dhiren N Sheth, president of the Cotton Association of India, which groups cotton exporters and traders.
Indian exporters had already shipped a record 9.5 million bales in the year from Oct 1, 2011, well above government forecasts. Around 500,000 bales are at ports, traders say, while the government has issued registration certificates for another two million bales.
“Only a few containers were ready to be loaded at ports,” Vijay Shrishrimal, managing director of Mumbai-based top exporter K N Resources Pvt Ltd, told Reuters.
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