(Reuters) - India could export an additional 255,000 tonnes of cotton in 2010/11 season ending September, but Indian exporters may have missed the bus as fresh supplies will only ease global prices that are already softening from record highs.
The world's second biggest grower and exporter of cotton which now sits on a huge stockpile, India dithered for months on allowing unrestricted cotton exports, much like it did for wheat where exports were allowed after global prices began falling.
Until Sunday when unrestricted exports were allowed, India had approved cotton shipments of only 1.11 million tonnes in the current season even though output estimates had been revised upward to 5.52 million tonnes in 2010/11 with domestic demand slowing.
Dhiren N Sheth, President of Cotton Association of India, told Reuters traders were hoping to export an additional 255,000 tonnes each by end-September.
"Though prices have declined in the international market, still there is a difference between Indian and global prices," he said.
Indian exporters are being offered about $1.10 a pound of cotton. Domestic prices are hovering around $0.90 a pound.
"Most Indian exporters are getting $ 1.10 per lb on FOB, which is still profitable, and this will also help them in negating some losses which they incurred earlier," said B.P Sekhsaria, chairman DD Cotton Ltd, a Mumbai-based trading house.
LITTLE IMPACT
India mainly exports cotton to top importer China and other Asian countries such as Bangladesh and Vietnam. But India's estimated total supplies of 1.36 million tonnes in 2010/11 could meet only a portion of the global demand of 7.7 million tonnes.
With 2.6 million tonnes the United States is the biggest cotton exporter, while China imports about 3.1 million tonnes, according to USDA data.
India's decision to remove quantity restrictions on cotton exports comes at a time when both global and domestic prices have dropped nearly 50 percent since March on declining demand from textile makers.
Cotton prices at ICE touched a record high of $2.27 per pound on March 7, and in India, the most traded Shankar-6 variety touched an all time high of $ 1.75 per pound (61,700 rupees per candy of 356 kg) on March 30.
"Additional shipments from India is not changing overall supply-demand situation, though cotton from India is being sold at a lower price as compared to Australian cotton," a Singapore-based cotton trader said on condition of anonymity.
India's cotton demand has risen roughly in line with economic expansion of 8.5 percent to 9 percent a year largely over the last four years, growing 25 percent to 4.6 million tonnes in 2010/2011 from 3.72 million tonnes in 2005/06.
Consumption by India's domestic textile industry is expected to reach 7.02 million tonnes by 2019/20, with demand being boosted by a move among its people away from polyester, and surging apparel exports.
