Cotton exports may fall short of commitments

Shipments may touch 20 lakh bales by Dec 15 deadline.
Amit Mitra
Hyderabad, Nov. 27
With cotton arrivals being tardy in the wake of unseasonal rains damaging the crop in some cotton producing States, exporters of the commodity are reconciling to the prospect of not being able to fulfil the export contracts for 55 lakh bales (of 170 kg) by December 15, the maximum export limit permitted by the Government.

Industry players are now almost certain that the full export commitment would not be met by the December 15 deadline, with different trade bodies giving different projections of the shortfall.

“Going by different estimates, exports by December 15 could just cross the 20-lakh-bale-mark, according to current trends. Arrivals are, however, beginning to touch the 3-lakh-bales a day level,” said Mr V. Srinivas, Joint secretary, Ministry of Textiles, who was in Hyderabad to participate in a textile industry meet.

Different cotton associations, however, feel that the shortfall could be more.

“In our estimates, we will barely touch 17 lakh bales. In Andhra Pradesh, we were expected to touch a production of 75 lakh bales (this season), but we do not think we can cross 40 lakh bales,” Mr G. Punnaiah Choudary, President of A.P. Cotton Association, told Business Line.
In certain centres, quality cotton arrivals had in fact dipped to 1.4 lakh bales a week ago.
So far, less than 15 lakh bales out of the permitted 55 lakh bales are believed to have been shipped out to different export destinations.Trade bodies are also not sure whether the projected domestic cotton production of 320 lakh bales could be met this season.
“From our estimates, the production will be between 280 and 300 lakh bales,” says Mr Choudary.
The next meeting of the Cotton Advisory Board is expected to take a call on the latest trends and, perhaps, tweak its earlier projections, including on the permissible export quantum.


Yarn prices move up
“Cotton prices are today ruling at Rs 47,000 a candy (of 356 kg) against Rs 22,000 same time last year. We feel that the price will average about Rs 40,000 for this season (which lasts till March 2011),” said Mr M.K. Patodia, CMD of GTN Industries.
In tandem with the rise in cotton prices, yarn prices have also spiralled. “The Government is monitoring the situation closely.

The Group of Ministers constituted for cotton and yarn is scheduled to have another round of meeting next week to take a call on the present situation on both the commodities,” Mr Srinivas said.
Industry sources say that the Government was considering tightening yarn export norms to stabilise domestic prices.
“This, if done, will have a more disastrous effect on the industry,” feels Mr Choudary.



Source: http://www.thehindubusinessline.com/2010/11/28/stories/2010112851780300.htm