India’s textile industry has urged Manmohan Singh, the prime minister, to ban cotton exports until January, complaining that local mills face serious domestic scarcity and spiralling prices after excessive exports.
India, the second-biggest cotton exporter after the US, first restricted exports in April. The plea from textile companies comes amid tight global supplies after losses in Pakistan and a week after New Delhi said it would permit the duty-free export of up to 5.5m bales, a relatively small volume, from October 1.
Indian authorities are due to meet on Tuesday to reconsider the decision.
The prospect of a further cutback in Indian supplies helped lift New York cotton futures to their highest level since 1995. ICE December cotton rose 2.1 per cent to 93.17 cents a pound.
“It is significant,” said Ron Lawson of LOGIC Advisors, a commodities researcher. “It turns all the buying back to the US.”
The rise in wholesale cotton prices has led textile companies in the US and Europe to warn about rising clothing prices next year.
While forecasters expect a record Indian cotton harvest this year, the Confederation of Indian Textile Industry, the trade body, warned that the crop might fall short of expectations due to heavy monsoon rains in growing regions. The industry body appealed to New Delhi for the imposition of a Rs10,000 ($216) tax on all cotton exports, whenever they begin.
“We are facing a crisis of a large magnitude,” said Shishir Jaipuria, confederation chairman and managing director of Ginni Filaments, which produces garments for western brands such as Benetton.
“If cotton is exported unabated, the industry will have to reduce capacity and there will be large unemployment. Only the cotton exportable surplus should leave,” he said.
In regulating its export flow, New Delhi has tried to balance the interests of its textile industry – which employs an estimated 35m people – and its 5m cotton farmers.
“There is hardly any cotton available in the market,” said S.P. Oswal, chairman of Vardhman Textiles, which makes clothes for retailers such as Gap, Esprit and H&M. “Mills will have to cut production. How does a cotton-surplus country create a disadvantage for its own employment?”
Elsewhere in commodities markets on Monday, base metals rallied on the back of better-than-expected economic data in China, the world’s biggest importer of metals such as copper.
Beijing said its industrial production accelerated in August to 13.9 per cent growth year on year, up from 13.4 per cent in July.
On the London Metal Exchange, copper for delivery in three months’ time rose to $7,630 a tonne, up 1.7 per cent, and analysts say copper prices could surpass a record high of nearly $9,000 a tonne, set in mid-2008, as soon as next year.
Tin prices hit a fresh two-year high, trading at $22,300 a tonne for the first time since August 2008. The metal is only 13 per cent shy of its all-time high of $25,500 a tonne set in May 2008.
Nickel, lead and zinc had posted gains of about 3 per cent.