India, the second-biggest grower of cotton, stopped registering export contracts after Cargill Inc., Louis Dreyfus Commodities and rivals filled the quota within 10 days after bookings opened amid a global shortage.
Traders applied for permits to ship 5.5 million bales, the limit set by the government, and were issued licenses for 1.22 million bales at 12:28 p.m. Mumbai time, the textiles ministry said today. Fresh applications will be accepted if more cotton becomes available, the ministry said.
Futures in New York jumped to a 15-year high after the U.S. Department of Agriculture raised a forecast for demand. Global usage will reach 120.8 million bales in the year started Aug. 1, up 0.2 percent from last month’s estimate, and production will be 116.7 million bales, down from the September forecast of 117 million, the USDA said Oct. 8.
“There’s a shortage the world over and Indian exporters are trying to export more and more,” Shishir Jaipuria, managing director of Ginni Filaments Yarn, said from New Delhi.
Futures for December delivery gained as much as 2.3 percent to $1.0964 a pound on ICE Futures U.S. Prices in India reached a record last week after an extended monsoon delayed harvesting.
Higher raw-material costs have prompted textile retailers including Arvind Ltd., Aarvee Denims & Exports Ltd., Reliance Industries Ltd. and Gokaldas Exports Ltd. to raise prices by as much as 15 percent, Citigroup Inc. economists Rohini Malkani and Anushka Shah wrote in a note today. Prices may advance further during the festive season, it said.
‘Export Obligation’
“Unbridled exports will deprive mills of raw materials when prices are shooting up,” said Jaipuria, who is also the chairman of the Confederation of Indian Textile Industry. “Mills and yarn producers may find it difficult to meet export obligations. The entire value chain will be affected.”
Arvind is the world’s largest denim maker and a supplier to Levi Strauss & Co. and Gap Inc.
India halted exports in April to augment supplies, and then introduced a licensing system for overseas sales a month later. Actual shipments can begin from Nov. 1 after permits are issued, the ministry said last month. Exports registration began Oct. 1.
Traders must complete shipments within 45 days of receiving permits, or latest by Dec. 15, Textiles Commissioner A.B. Joshi said by phone from Mumbai today.
Mills last month demanded a halt in exports in the October- to-December period, and sought a duty of 10,000 rupees ($223) a ton to deter shippers.
India’s production may be 32.55 million bales in the year started Oct. 1, from 29.5 million bales a year ago, according to the state Cotton Advisory Board. Exports were 8.3 million bales last year, with more than half going to China, the biggest user.
A bale weighs 170 kilograms in India.
