New Delhi: India will likely allow unrestricted cotton exports in the next marketing year starting October 1 as local output is expected to climb for a second successive year due to higher planting and well-distributed rainfall, senior government officials said Thursday.
India, the worldΆs second-largest cotton grower as well as supplier, kept an export ceiling of 5.5 million bales for 2010-11 before raising it to 6.5 million bales in early July and finally lifting the restrictions later last month until the end of the season as domestic prices had eased from their record highs in March and April.
Cotton output may cross 34 million bales in 2011-12 as farmers, encouraged by record prices in 2010-11, have boosted planting, said a member of the Cotton Advisory Board, which estimates the commodityΆs production each year.
The Board is yet to announce its precise forecast for the 2011-12 season. The country expects to have produced 32.5 million bales in 2010-11.
Areas under cotton until August 5 rose to 10.99 million hectares, compared with 10.43 million hectares a year before.
Although the weather department has forecast a slightly below normal monsoon season in 2011, it has maintained that crop sowing wonΆt be affected as the rainfall distribution, equally important as the quantum of rainfall, will be fairly wide-spread.
Cotton is usually sown from June with the arrival of monsoon rains and harvested from mid-September.
“Cotton areas may go up to 12 million hectares. So going by the sowing trend and the weather pattern, cotton production will be definitely more than last year. It will encourage the government to keep the exports under the open general licence (unrestricted exports) in 2011-12,” said a senior government official. However, the government may only resort to curbs if unrestricted exports threaten to hit domestic supplies and drive up prices of the key raw material of textile mills, he added.
The government will announce its decision next month on whether to allow unrestricted cotton exports in 2011-12, Agriculture Secretary P.K. Basu told FE.
Cotton exports by India were subjected to immense debate earlier this marketing year as the textiles and the agriculture ministries sparred over allowing more shipments to gain from a global shortage, exacerbated by floods in big producers such as China and Pakistan.
While the agriculture ministry pushed hard for allowing more exports than the quantity initially approved to maximise returns for farmers, the textile ministry-- the nodal ministry for cotton cotton distribution--opposed any such move fearing a domestic spiral of prices and its adverse impact on cash-strapped textile mills.
However, the government freed the exports after local prices crashed from their peaks as cash-strapped textile mills cut down on their consumption. Domestic cotton prices have tumbled by around a half to R34,500 per candy, of 356 kg each, since April.
