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Tuesday, February 22, 2011
Sima News Clippings 22/2/2011
Wednesday, December 29, 2010
High cotton prices weave woes for industry
December 27, 2010
High cotton prices spun out enough problems for the $62 billion textiles industry, but weaved gains for growers and traders in 2010.
Amidst pulls and pressures from the conflicting interests, a ministers' group under the guidance of Finance Minister Pranab Mukherjee kept reviewing the price and crop situation, with excessive winter rains playing spoilsport.
The textiles industry pulled out all stops to lobby with the textiles, commerce and finance ministries seeking a ban on cotton exports. But Agriculture Minister Sharad Pawar had a different take — hardening of cotton prices in the global market is a God-send opportunity for the farmers. Why not allow them to avail of it at least till February, Mr. Pawar argued.
Collective ministerial wisdom seems to have prevailed and a middle path was chosen to allow exports of up to 5.5 million bales.
Prices shot up in the international market because of the demand-supply imbalance, driven mainly by an increase in consumption in China and poor harvests in Pakistan due to floods.
The global trend was reflected in the local ‘kapas mandis' as well. The natural fibre has remained in short supply since April, but prices shot up by 90 per cent in the last five months. A cotton candy (356 kg each) was sold at an all-time high of Rs.45,000 in October in the domestic market, according to industry officials. The government intervened by way of capping cotton exports at 5.5 million bales and cotton yarn at 720 million kg. But it did not help cool prices.
The industry found everything wrong with the policy of allowing exports and the apparel units even downed shutters in protest on November 19.
However, it described the developments as good for farmers, many of whom have switched to the genetically modified Bt Cotton variety.
“The year was exceedingly good for farmers, whose production cost had already declined substantially because of the use of Bt Cotton seeds,” Confederation of Indian Textiles Industry (CITI) Director General D. K. Nair said.
Total textiles exports managed to grow by 11.5 per cent to $7.57 billion year-on-year during April-July 2010-11, supported by a pick-up in demand in Western markets, where the bulk of the consignments are shipped.
Exports contribute a little over one-third of the total revenue of the textiles industry. The Textiles Ministry had fixed a $25-billion target for 2010-11 against $22.41 billion in the last fiscal.
Garment exporters, who contribute about half of the total textiles exports, continued to face a demand slump. Apparel exports declined by an annualised 6 per cent to $5.75 billion between April and July. However, things seem to have been improving since August.
“In the first few months of the current fiscal, the trend was negative mainly due to less number of orders from our traditional markets. Although the rate of decline has reduced now, the demand is yet to pick up,” Apparel Export Promotion Council Chairman Premal Udani said.
Despite the problem of high raw material costs, total textiles production rose by 10 per cent to about 70,000 million sq. m. in 2010 as compared to the previous year.
As per the estimates of the Textiles Ministry, cotton production in 2010-11 is likely to be 325 lakh bales. But it remains to be seen whether production can reach this figure in the wake of excess winter rains in the key growing areas of Maharashtra and Gujarat.
SICA estimates for 2010-11 lower than 2009-10
Tuesday, December 28, 2010, 19:49[IST]
The South India Cotton Association (SICA) has estimated the cotton crop for the 2010-11 season at 308 lakh bales (of 170 kg each) as compared to an estimate of 309 lakh bales (of 170 kg) during the 2009-10.
Cotton Advisory Board's (CAB) has given an estimate of 325.48 lakh bales which is also slightly higher than the estimate it had given for 2008-09 at 309 lakh bales.
There has been a decline in the projections by SICA as compared to last year. The reasons for the decline is the rough weather and unfavourable climatic conditions which have led to floods and heavy winds thereby damaging the crop. Commenting on the seasonal plight , Mr K.N. Viswanathan, Honorary Secretary, SICA said that, "Damage due to unseasonal rains, flooding in cotton tracts and heavy wind could have damaged the standing crop. Now, winter has started."
As per the Group of Secretaries meeting held in December, the output is expected to be 290 lakh bales during 2010-11. Commenting on the cotton output textile industry sources said that, "The erratic monsoon and floods in the major cotton producing States such as Andhra Pradesh, Maharashtra and parts of Gujarat have seriously affected cotton production. We expect the production to hover around 290 lakh bales."
A comparison of the CAB estimate with the cotton association's estimate revealed a decline in production estimates in every cotton growing State except Punjab, Haryana and Rajasthan, where the CAB had estimated the crop size at 36.77 lakh bales, while the current year estimate of SICA is higher at 44 lakh bales.
Tuesday, December 28, 2010
Pakistan appeals for Indian help on cotton front
P Sundarrajan
The Hindu Farmers dry raw cotton. File Photo
With Pakistan reeling from the after-effects of floods, its textile mill sector has appealed to India to honour the commitments for dispatching raw cotton in letter and spirit.
As the floods had devastated large tracts of farm land, cotton production in Pakistan has been affected along with most other major crops. In such a situation, Pakistani textile mills not only require the contracted cotton from India, but a liberal gesture in the form of additional raw cotton as well.
Addressing a press conference here, All Pakistan Textile Mills Association Vice Chairman Shahzad Ali Khan pointed out that India had managed to export only one lakh bales out of the contracted quantity of 10 lakh bales. What the Pakistan industry needed was not just the entire contracted amount but an additional quantity. India has so far exported about 30 lakh bales of cotton to other countries and was in a position to assist the Pakistani textile industry.
Expressing the hope that balance quantity of nine lakh bales would be shipped out at the earliest, Mr. Khan said Pakistan was faced with a severe supply crunch on the raw cotton front due to floods in parts of cotton growing areas in the country. It is estimated that Pakistan lost about 25 lakh bales of cotton due to the floods and faces an overall deficit of 40 lakh bales.
Urging India to “help a neighbour’’; he expressed the hope that the balance quantity of nine lakh bales would be shipped out at the earliest.
The Pakistan Textile Mills Association, he said, had already submitted a request in this regard to the Indian High Commission in Islamabad. A similar plea has been lodged with the Pakistan High Commission with the hope that it would be followed up with the Indian industry and the Government. Desperate for succour from India, the Pakistani textile industry has also taken up the issue with the cotton exporters in Mumbai.
China gets Gujarat cotton cheaper than TN mills
M.R. Subramani
Chennai, Dec. 27
Chennai-based Loyal Textiles pays Rs 82,500 to get 150 bales (170 kg each) of cotton from Gujarat, country's top producer, to one of its mills in Tamil Nadu by ship. One of its competitors in China gets the same quantity cotton from Gujarat at Rs 22,500!
"Even if you add the cost of getting cotton to the ports at Rs 12,500 and port handling charge of Rs 12,000 for shipments to China, it still works out cheaper," said Mr Anand Poppat, Vice-President of Saurashtra Ginners Association. "By road, sending cotton to Tamil Nadu costs as much as Rs 90,000 for the same quantity," he said.
"Truckers demand higher rates since the roads are bad. Mills in South India can get cotton cheaper from North Africa than Gujarat," said Mr D.K. Nair, Secretary-General of Confederation of Indian Textiles Industry.
"Most of the mills in Tamil Nadu are getting cotton through the Shipping Corporation of India vessels. The corporation works out the cost based on road transport rates," said Mr Manickam Ramaswamy, Managing Director of Loyal Textiles. "The problem is that shipping within our ports can be done only by Indian-owned companies. The Cabotage law prohibits shipping from Indian port to another by vessels of foreign firms," he said.
The industry has been seeking changes to the law but those opposed point to various problems, including monitoring movement of foreign vessels within Indian waters.
"If a foreign vessel is allowed to carry cotton from Gujarat to say Tuticorin, I can get the consignment shipped for $200-300 (Rs 10,000-13,600)," said Mr Ramaswamy.
"Ships that bring containers to our ports with chemicals and other consignments have to return empty if they don't get any orders. Instead of returning empty, they offer to ship cotton at cheaper rates," said Mr Nair.
Freight charges are highest to Turkey at around Rs 82,000 but still work out cheaper than moving from one Indian port to another or by road. "
Why Cotton Prices Will Not Go Down
December 7, 2010
By Dr. O. A. Cleveland
Professor Emeritus, Mississippi State University
For Bayer CropScience
Professor Emeritus, Mississippi State University
For Bayer CropScience
Cotton prices have enjoyed the most fantastic run in history, having jumped more than 100 percent in less than six months. While prices are off their record 157.23 tick, they will remain strong well into 2012, with excellent possibilities to keep the run going into 2013. The new crop December (December 2011) will once again move above the one dollar level and could reach into the one dollar plus, i.e., the “teens.”
Return to 1970 and Russia’s political decision to upgrade its people’s diet. In 1973 the country suffered its worst wheat crop failure ever. Needing feed for livestock to maintain its promise to upgrade the country’s diet, the Russian government sent representatives to the U.S. and over a single weekend purchased much of the U.S. wheat crop. The exchange opened Monday morning and no one could understand why the wheat market immediately jumped to limit up — a trend that continued for several days. Then the traders learned that the Russian buyers had gone to every wheat exporter of substance the prior weekend and purchased “all" the U.S wheat crop.” After much uproar, wheat, little
more than a $2.50 per-bushel commodity, jumped well above $6.00. Other field crops received a small boost in price, but wheat was the real story as that was the only commodity in a deficit production quandary. Too, that supply/demand situation was resolved and the price rations of world field crops came back in line. Remember, Russia was feeding about 130 million people
Fast forward to 2000 and both China and India have made the political decision to upgrade its people’s diet. The Chinese selected pork and the Indian government selected poultry — remember animals need grain. These two countries are feeding well more than one BILLION people — ten times that of Russia’s 1973 needs. In the process China has become the world’s largest importer of both corn and soybeans (they already were the world’s larger importer of cotton). Further, the U.S. made a political decision to use corn as the feedstock to produce ethanol. The mid -2000s also saw significant oilseed and wheat crop disasters, (Europe and Australia, respectively). Thus, the world was on the brink of a food disaster by the 2005. The demand for oilseeds, feed grains and food grains had jumped well above the supply and prices had to skyrocket. Yet, cotton had the largest supply of stocks on record. Presto, price ratios moved immediately in favor of grains and oilseeds, leaving cotton acreage to plummet.
The world is no longer on the brink of a food disaster, but supplies remain tight. The world has used its surplus of cotton supplies — taking five years to do so. All this says is that economics works. With cotton supplies used the market has to catch up with the grains and oilseeds. More specifically, the price ratios between the various field crops have to come back in line. That is what dollar (plus) cotton has done. Yet, the world cotton supply cannot be rebuilt in a year. Neither can the oilseed and grains stocks as we are seeing. Cotton is now on a competitive tract for acreage and will remain so for at least two years and specifically until all the commodities can rebuild supplies.
The next step will be for additional land to be brought into production — and there is plenty of it. Yet, that will take some 5 to 10 years. In the meantime cotton has joined the party and will see many more months of the magic dollar sign.
Sunday, December 26, 2010
Indian official cotton estimate to arrive in mid JanuaryDecember 23, 2010 (India)
Cotton Advisory Board’s (CAB) revised estimate to be available in mid January-2011. The CAB is a government of India constituted body consisting of about 57 members which includes, Ministry of Textiles, Agriculture Ministry, Departments of Agriculture of various cotton growing states, representatives of ginning, trading, spinning sectors, etc. CAB overseas the cotton production estimate and makes the official estimate.
The last meeting of the CAB was in August 2010. It should have met this month, but due to the holiday season, the next meeting will be around mid January 2011. At this next meeting, an official revised estimate for the 2010/11 season will be available. On December 22nd, an official from the Ministry of Textiles, India informed about the possibility of next report about mid January. According to a source, there have been losses due to weather related issues in the States of Andhra Pradesh and Gujarat. So far only rough estimates on the cotton losses are available. Rough estimates indicate that 100,000 bales were damaged in the State of Andhra Pradesh. Gujarat might have lost 200,000 to 300,000 bales. Karnataka state might have lost 57,000 bales. Estimate for the loss in the state of Maharashtra is not available yet.
Mr. Subhash Grover, Chairman and Managing Director of Cotton Corporation of India spoke to this scribe on December 22nd and concurred that the next estimate from CAB will be available during mid January when the board is expected to meet. He also advised that the CAB will provide a revised estimate.
Any decision to allow additional export over the already approved limit of 5.5 million bales will be made only by the Group of Ministers involving Agriculture, Textiles, Commerce and Finance upon the recommendation from the group of secretaries of these ministries. He is of the opinion that government would allow the export of already committed maximum quota of 5.5 million bales. Decision will be expected soon on the export of un-exported quantity once the data is verified, according to Mr. Grover.
Seshadri Ramkumar, Texas Tech University
Saturday, December 25, 2010
As cotton gets pricey, textile firms turn to polyester
Suresh P. Iyengar
Mumbai, Dec. 25
With the sharp rise in cotton prices, textile manufacturers have shifted their focus to ramping up polyester yarn production capacity.
Alok Industries, a leading integrated textile company, plans to double its polyester yarn capacity to 1,200 tonnes a day by March at an investment of Rs 800 crore.
Mr Sunil O. Khandelwal, Chief Financial Officer, said the company had foreseen the shortage of natural fibre cotton and would begin increasing polyester yarn production from next month.
Similarly, Ganesh Polytex, which produces polyester staple fibre by recycling plastic pet bottles, plans to increase its processing capacity by 15,000 tonnes to 72,000 tpa. As part of its forward integration plans, the company is also putting up 25,000 spindles to produce polyester yarn at its existing Bilaspur plant in Chhattisgarh. This will involve an investment of Rs 125 crore.
Mr Gopal Agarwal, Chief Financial Officer, said Ganesh Polytex would tap the Centre-sponsored Technology Upgradation Fund (TUF) scheme for the spindles.
The price gap between cotton and polyester yarn has widened in the last few months with demand for the former increasing substantially on the back of a lower-than-expected crop this season, said Mr Khandelwal. Cotton yarn of 40s counts currently trades at Rs 260 a kg while polyester yarn of 80-denier is priced at Rs 110-115 a kg. Cotton prices are expected to stabilise by mid-January with arrivals improving. The most popular variety, Shankar-6, may fall from Rs 41,000 to Rs 37,000-38,000 a candy as supply improves.
More than the fall in production, the uncertain Government policy on cotton has made it difficult for companies to plan their future, said an analyst. The textile industry's shift to polyester has pushed up the prices of the key raw material, PTMEG (poly tetra methylene ether glycol), but this has been moderate compared to cotton, he said.
The fall in cotton production over the years has pushed up use of polyester by the textile sector. In the last decade, this has nearly doubled from 30 per cent to 55 per cent and expected to further increase to 70 per cent in the next five years, said Mr Khandelwal.
On the quality issue, he added, a fabric with 75 per cent polyester and 25 per cent cotton is considered a good blend given the price advantage. A shirt made of 100 per cent cotton would cost about Rs 600 while that in polyester Rs 350-400.
Renewed cotton export halts drop in yarn prices
24 Dec, 2010, 01.09AM IST, S Sujatha,ET Bureau
COIMBATORE: Rising cotton prices on the back of renewed exports have arrested the fall of cotton yarn prices . Further, it has also led to a bullish trend across the textile value chain.
All industry stakeholders are now trying to hold on to their stocks as the raw material prices are expected to remain high for quite sometime. “Even before yarn manufacturers could absorb the dropping cotton value, the prices have moved up again. So, it will be difficult to bring the yarn prices,” said Coimbatore-based KPR Mills managing director P Natraj.
The prices of finer count cotton yarn had fallen by around Rs 20-25 per kg while the coarser counts, mainly used by the knitwear manufacturers in Tirupur, are expected to fall by Rs 15-20 per kg in the first week of January as the prices are fixed on monthly basis. The warp yarn had fallen by Rs 10-15 per kg. The prices of 100’s count super fine cotton yarn, which was ruling at Rs 410 per kg during the peak period, has come down to nearly Rs 380-390 per kg. But now, the renewed bullish trend and the compulsions of spinning mills to buy cotton at the current levels due to depleting stocks have created a panic in the market.
The Southern India Mills Association secretary general K Selvaraju said that the yarn prices will now hold steady as the fabric prices too have started picking up. “There will be no change in yarn prices despite bringing it under restricted list. Yarn prices will come down only when the cotton prices cool off,” he added.
“Following the curb on yarn exports, the garment exporters were going slow in procuring cotton yarn as they expected prices to drop from January. But the sudden rise in cotton prices have led to panic buying in the market,” said a leading cotton yarn supplier in Tirupur market.
The price of Shankar-6, the widely used Indian cotton, was quoted at Rs 47,000 per candy in the first week of November. After the suspension of export registration, the prices started cooling off and it reached Rs 40,000 per candy on December 15. But the recent message that the export registration will start again for the un-shipped quantity of 25 lakh bales has pulled up prices to the Rs 43,000-per candy levels. Industry experts feel that it may even go up to Rs 50,000 per candy once the export registration starts
Friday, December 24, 2010
Centre to allow export of 2.5 million bales of unshipped cotton
December 24, 2010
Special Correspondent
Union Commerce and Industry Minister Anand Sharma on Thursday said the government would allow export of 2.5 million bales of unshipped cotton out of the 5.5 million bales permitted till December 15.
Talking to newsmen here, Mr. Sharma said, “We have reviewed the market arrivals and availability (of cotton). What had been determined as exportable surplus will not be held back. Almost 2.5 million bales have not been shipped so far, we will allow export of that.''
Mr. Sharma said the government had capped export of cotton at 5.5 million bales this year to prevent a sharp rise in domestic prices. Export contracts totalling 5.24 million bales had been registered with the Textile Commissioner. The export registrations were valid only till December 15. Exporters, however, were not able to ship out the entire 5.24 million bales cotton by December 15, with the result that export registrations lapsed.
On their part, exporters had been asking the government to revalidate the contracts, giving them more time to ship out the balance quantum.
The Minister said the government would allow exporters to ship out the balance, but did not clarify whether the existing registrations would be revalidated or traders would have to apply afresh.
According to industry players, exporters had already gone through the registration process for exporting the 2.5 million bales of cotton but failed to meet the December 15 deadline due to various reasons.
The Ministry of Textiles on Wednesday decided not to extend the deadline and subsequently cancelled the registrations. Now the Directorate General of Foreign Trade (DGFT), instead of the Textile Ministry, is working on revised guidelines for export registrations and execution of shipment.
Thursday, December 23, 2010
India cotton price jumps
MUMBAI (updated on: 2010-12-22 22:19:26 PST):
Cotton prices in India jumped on Wednesday as exporters bought aggressively after the government said it will still allow exports of 2.5 million bales despite expiry of a Dec. 15 deadline, three exporters told Reuters.
Trade Minister Anand Sharma said on Tuesday that India -- the world's second-biggest producer of cotton -- would allow exports in 2010/11 of the 2.5 million bales that exporters have failed to ship so far.
India, which is also the world's second-biggest exporter of cotton, had given permission for exports of 5.5 million bales in the 2010/11 cotton year that began on Oct.1, but had asked exporters to ship the entire quantity from Nov. 1 to Dec. 15.
Exporters managed to ship only about 3 million bales by the deadline as unseasonal rains in October and November delayed arrivals of bales at domestic markets.
"Traders were very active. They were expecting the government will allow exports from first or second week of January," said Chirag Patel, chief executive officer at Jaydeep Cotton Fibers Pvt. Ltd, one of the country's leading exporters.
In India, the prices of the most common Shankar-6 variety rose by 900 rupees to 43,000 rupees ($952.8) per candy of 356 kg each on Wednesday afternoon.
"Indian cotton is much cheaper than Chinese or U.S. cotton. Exporters are expecting buyers in China will pay higher prices to secure supplies," said Dharmesh Lakhani, a trader and exporter at Rajkot in the western state of Gujarat.
Overseas demand for Indian cotton has increased after bad weather hit crops in China and Pakistan, both leading consumers.
U.S. cotton futures fell more than 3 percent on Wednesday as the market took a breather after climbing to an all-time high in the last session on speculative buying and tight supplies, while China's cotton market lost more that 2 percent. "Overall cotton arrivals have picked up, but still supply of quality fibre is not sufficient," said Paresh Valia, an exporter based in Mahuva, in Bhavnagar district of Gujarat.
Domestic cotton arrivals -- bales which are sold domestically at Indian spot markets -- have risen 1.9 percent so far in the 2010/11 season over a year ago on higher output and accelerated harvesting after the weather turned dry, the state-run Cotton Corp of India said on Dec. 20.
India is likely to produce more than 32.5 million bales of cotton in 2010/11, topping last year's 29.5 million bales, industry and government officials have said.
Trade Minister Anand Sharma said on Tuesday that India -- the world's second-biggest producer of cotton -- would allow exports in 2010/11 of the 2.5 million bales that exporters have failed to ship so far.
India, which is also the world's second-biggest exporter of cotton, had given permission for exports of 5.5 million bales in the 2010/11 cotton year that began on Oct.1, but had asked exporters to ship the entire quantity from Nov. 1 to Dec. 15.
Exporters managed to ship only about 3 million bales by the deadline as unseasonal rains in October and November delayed arrivals of bales at domestic markets.
"Traders were very active. They were expecting the government will allow exports from first or second week of January," said Chirag Patel, chief executive officer at Jaydeep Cotton Fibers Pvt. Ltd, one of the country's leading exporters.
In India, the prices of the most common Shankar-6 variety rose by 900 rupees to 43,000 rupees ($952.8) per candy of 356 kg each on Wednesday afternoon.
"Indian cotton is much cheaper than Chinese or U.S. cotton. Exporters are expecting buyers in China will pay higher prices to secure supplies," said Dharmesh Lakhani, a trader and exporter at Rajkot in the western state of Gujarat.
Overseas demand for Indian cotton has increased after bad weather hit crops in China and Pakistan, both leading consumers.
U.S. cotton futures fell more than 3 percent on Wednesday as the market took a breather after climbing to an all-time high in the last session on speculative buying and tight supplies, while China's cotton market lost more that 2 percent. "Overall cotton arrivals have picked up, but still supply of quality fibre is not sufficient," said Paresh Valia, an exporter based in Mahuva, in Bhavnagar district of Gujarat.
Domestic cotton arrivals -- bales which are sold domestically at Indian spot markets -- have risen 1.9 percent so far in the 2010/11 season over a year ago on higher output and accelerated harvesting after the weather turned dry, the state-run Cotton Corp of India said on Dec. 20.
India is likely to produce more than 32.5 million bales of cotton in 2010/11, topping last year's 29.5 million bales, industry and government officials have said.
India Tightens Rules on Cotton Exports
DECEMBER 23, 2010, 8:35 A.M. ET
By DILIPP S NAG
MUMBAI –India has tightened the rules for issuing permits to export cotton yarn in a bid to control prices and ensure better supplies for local textile mills and apparel makers.
The Directorate General of Foreign Trade said in a statement late Wednesday that the commodity has been included on a list of restricted export items. That means exporters seeking new permits will now have to approach the foreign trade office instead of the textile ministry, which was issuing export certificates until now.
The foreign trade office said it will work out the modalities for the grant of new export permits at a later date.
Local cotton yarn prices in November rose 5%-7% as exporters sought to take advantage of a global shortage, although prices came down this month after the government imposed a cap of 720 million kilograms on cotton yarn exports in the fiscal year through March.
"Prices of cotton yarn have already softened slightly this month and we may see a further fall in the coming days," said an executive with the South India Cotton Association who declined to be named.
Trade Secretary Rahul Khullar said Wednesday a panel of top bureaucrats will review the export cap on Jan. 15.
India is estimated to produce around 3,550 million kilograms of cotton yarn in 2010-11. Demand for Indian cotton and yarn has soared over the past few months because of crop damage in China and Pakistan. India is one of the world's top cotton yarn exporters and its key buyers include China, Pakistan and Bangladesh.
India usually exports around 600 million kilograms of cotton yarn annually, according to industry estimates. It exported around 460 million kilograms of yarn between April 1 and Oct. 31.
As shipments are still going on, the new rule will help improve local supplies only if some exporters fail to export their approved quantities within a stipulated period.
Write to Dilipp S Nag at dilipp.nag@dowjones.com
India cotton price jumps on exports green light
Wed Dec 22, 2010 1:42pm IST
* Prices seen rising further on strong export demand
* Govt seen allowing exports from early Jan-exporters
* Arrivals rise on dry weather, quality produce still scarce
By Rajendra Jadhav
MUMBAI, Dec 22 (Reuters) - Cotton prices in India jumped on Wednesday as exporters bought aggressively after the government said it will still allow exports of 2.5 million bales despite expiry of a Dec. 15 deadline, three exporters told Reuters.
Trade Minister Anand Sharma said on Tuesday that India -- the world's second-biggest producer of cotton -- would allow exports in 2010/11 of the 2.5 million bales that exporters have failed to ship so far.
India, which is also the world's second-biggest exporter of cotton, had given permission for exports of 5.5 million bales in the 2010/11 cotton year that began on Oct.1, but had asked exporters to ship the entire quantity from Nov. 1 to Dec. 15.
Exporters managed to ship only about 3 million bales by the deadline as unseasonal rains in October and November delayed arrivals of bales at domestic markets.
"Traders were very active. They were expecting the government will allow exports from first or second week of January," said Chirag Patel, chief executive officer at Jaydeep Cotton Fibers Pvt. Ltd, one of the country's leading exporters.
In India, the prices of the most common Shankar-6 variety rose by 900 rupees to 43,000 rupees ($952.8) per candy of 356 kg each on Wednesday afternoon.
"Indian cotton is much cheaper than Chinese or U.S. cotton. Exporters are expecting buyers in China will pay higher prices to secure supplies," said Dharmesh Lakhani, a trader and exporter at Rajkot in the western state of Gujarat.
Overseas demand for Indian cotton has increased after bad weather hit crops in China and Pakistan, both leading consumers.
U.S. cotton futures fell more than 3 percent on Wednesday as the market took a breather after climbing to an all-time high in the last session on speculative buying and tight supplies, while China's cotton market lost more that 2 percent.
"Overall cotton arrivals have picked up, but still supply of quality fibre is not sufficient," said Paresh Valia, an exporter based in Mahuva, in Bhavnagar district of Gujarat.
Domestic cotton arrivals -- bales which are sold domestically at Indian spot markets -- have risen 1.9 percent so far in the 2010/11 season over a year ago on higher output and accelerated harvesting after the weather turned dry, the state-run Cotton Corp of India said on Dec. 20.
India is likely to produce more than 32.5 million bales of cotton in 2010/11, topping last year's 29.5 million bales, industry and government officials have said.
Govt puts cotton yarn exports under restricted category
New Delhi, Dec 22 (PTI) The government today brought cotton yarn export under licence regime by putting it under the"restricted"category in the backdrop of sharp rise in prices, which have hit garment manufacturers.
The policy change notified by the Directorate General of Foreign Trade (DGFT) has put a hindrance to the cotton yarn export, even to the extent of 720 million kg permitted earlier. The move comes in the wake of 85 per cent jump in yarn prices in the last nine months. While traders have exhausted the registrations, up to the ceiling of 720 million kg, the actual exports aggregated 530 million kg. The registrations will expire on January 15 by which all export transactions have to be completed. Commerce Secretary Rahul Khullar told reporters that the government would review the situation after January 15 and then only decide whether to allow further exports."The limit at the present moment has been fixed at 720 million kg, that is subject to review. We will review that and come back to you by mid-January,"he said. He said the restriction would also be applicable to the yarn-making in the export processing and special economic zones, as of now. But, the government has been flooded with representations from these units seeking waiver from the export bar. Khullar said there is a tug of war between different segments of the textile industry -- yarn makers and fabric and garment manufacturers. While the yarn makers decry the restrictions, the move has come in as a relief to the garment makers. As for the export of cotton, exporters can ship only 2.5 million bales- the balance from the overall ceiling of 5.5 million bales imposed in September. However, the traders have to go in for fresh registrations with the DGFT and not the Textile Commissioner, as was the case earlier. The Confederation of Indian Textile Industry (CITI) said the basic problem arose out of high cotton prices.
India to Issue New Permits for Cotton Exports
DECEMBER 22, 2010, 9:00 A.M. ET
NEW DELHI – India will issue fresh permits for cotton exports, Rita Menon, a senior official from India's Ministry of Textiles, said Wednesday.
The government had previously allowed exports of 5.5 million bales of 170 kilograms each between Nov. 1-Dec. 15. Many traders actually failed to meet export commitments after heavy rains delayed the cotton harvest in some areas.
Trade Minister Anand Sharma said Tuesday 2.5 million bales from this entitlement still need to be shipped.
Demand for Indian cotton has soared in the past few months as the country is expecting a bumper crop of 32.5 million bales in the year through Sept., 30, 2011, thanks to higher plantings at a time when crops in other key producing states like China and Pakistan have been hurt by floods.
Applications for new permits are unlikely to begin before Jan. 5 as traders are required to submit dispatch details with the government within 21 days of actual shipment, according to senior trade officials.
Uncertainties over when the permits will be issued will delay shipments to buyers including China, Pakistan and Bangladesh, which together account for more than 80% of the country's total exports, the trade officials said.
The delay in supplies from India – the world's second-largest exporter – is also expected to drive up global prices further, they added.
IntercontinentalExchange cotton futures hit an all-time high Tuesday, surpassing Monday's record rate, and ended 1.2% up at $1.567 a pound for March delivery, over worries supplies will be tight in the coming year.
Issuing new permits is unlikely to drive up local prices because the market had already factored in exports of 5.5 million bales in 2010-11, D.K. Nair, secretary-general of the Confederation of Indian Textile Industry, said Tuesday.
But in the past year, huge export demand drove up local prices by more than 70%. India's textile industry, the country's top consumer of cotton, has staunchly opposed loosening cotton exports over fears of local shortages.
India to Decide Cotton Export Limit in Jan
Author： * Time：Dec 23 2010 9:04AM
Indian government will decide whether to raise its export limit for cotton above 5.5 million bales for 2010-11 in mid-January, trade secretary Rahul Khullar said on Wednesday, and registration for current export quotas will reopen next week.
Trade minister Anand Sharma said on Tuesday India would allow exports in 2010-11 of the 2.5 million bales that exporters have failed to ship so far under the 5.5 million bales allowed.
India, the world's second-biggest producer and exporter of cotton, had given permission for exports of 5.5 million bales in the 2010-11 cotton year that began on October 1, but had asked exporters to ship the entire quantity from November 1 to December 15.
Exporters managed to ship only about 3 million bales by the deadline as unseasonal rains in October and November delayed arrivals of bales at domestic markets.
"A committee comprising the textile, agriculture and commerce secretaries will review the demand-supply situation and take a call on raising the limit on January 15," Khullar said.
Cotton exporters are demanding permission to ship up to 8 million bales in 2010-11 as the country is set to harvest more than 32.5 million bales in 2010-11, topping last year's 29.5 million bales, industry and government officials have said.
"I think from the first or second week of January the government will allow shipments of 2.5 million bales," said Chirag Patel, chief executive officer at Jaydeep Cotton Fibers Pvt. Ltd, one of the country's leading exporters.
Overseas demand for cotton has increased after bad weather hit crops in China and Pakistan, both leading consumers. "The country has also put a cap on cotton yarn exports at 720 million kg and exporters have so far managed to export 530 million kg," Khullar said.
Fresh registration for cotton exports to begin in January
BS Reporter / Mumbai December 23, 2010, 0:09 IST
The registration for exports of the remaining 2.5 million bales (1 billion = 170 kgs) of cotton – the total allocation was for 5.5 million bales – is likely to start in the first week of January.
According to industry insiders, exporters had already gone through the registration process for exporting the 2.5 million bales of cotton but failed to meet the December 15 deadline due to various reasons. The Ministry of Textiles on Wednesday decided not to extend the deadline and subsequently cancelled the registrations.
Earlier this week, the Ministry of Commerce had hinted that fresh registrations had to be done with the directorate general of foreign trade (DGFT), instead of the Textile Commissioner. DGFT is also working on revised guidelines for export registrations and execution of shipment. The traders believe the new norms will be favourable for the industry.
The industry had come up with three suggestions to facilitate export of cotton: (i) Exports should be registered only when a valid letter of credit (LC) is issued by a bank. (At present, exports can also be executed against cash and industry insiders feel that it opens room for trade manipulation.)
(ii) The shipment period should be reduced from 45 days to 30 days to ensure that only genuine traders will enter the buying agreement and execute deals. (The 45-day period allowed traders to negotiate with buyers with the wrong intention.)
(iii) To ensure that traders cannot hoard huge quantities of cotton in neighbouring countries like Bangladesh by opening up subsidiary offices and transport to other destinations when prices rise or buyers agree to pay a premium. (The process would delay delivery of goods for months behind the actual shipment from India.)
“Over and above, we had urged the government to take punitive actions against such traders who have malafied intentions or ban them from exports in the future,” said M B Lal former CMD of Cotton Corporation of India (CCI) and MD of a Mumbai- based cotton traders and exporter Shail Exports.
In September, the textile ministry had opened registration for 5.5 million bales of cotton exports. But, within ten days between October 1-15 the registered quantity surpassed the quota. The government, therefore, did not allow fresh registrations.
Cotton importers suddenly shifted to India when huge quantities of the crop was damaged in floods in Pakistan and China witnessed a surge in domestic use resulting into a dramatic rise in global prices. The prices of the benchmark variety of cotton Shankar 6 shot up sharply in the last three months to Rs 11,838 a quintal on Wednesday as against Rs 9,617 a quintal on September 1.
Traders, however, are divided over the quantity of cotton production in India. Lal said the country’s total cotton output should be around 35 million bales, but an industry veteran, requesting anonymity, said the total output should be at 33.5 million bales because huge quantity of crop was damaged in Andhra Pradesh.
Owing to unseasonal rainfall, around 30 per cent of cotton crop was damaged in Andhra Pradesh. Total cotton output in the state was reported at 5.4 million bales.
However, according to Cotton Association of India (CAI) estimates, the total output will remain at 34.7 million bales this season, against 30.75 million bales in the previous season. The Cotton Advisory Board (CAB), under the supervision of the Textile Ministry, had estimated the total output at 32.5 million bales.
Govt. welcomes all for new cotton exports registration
Saurabh Gupta | 22 Dec, 2010
The Government Wednesday welcomed all cotton exporters (new and old) for registration of the remaining portion of the 5.5 million bales (of 170 kg) that is allowed for shipments this cotton season (October 2010-September 2011).
"We welcome all cotton exporters (old and new) for registration of 2.5 million bales of unshipped cotton out of the 5.5 million bales permitted this year," Union Minister for Textiles Dayanidhi Maran told media on the sidelines an award function in New Delhi.
The minister stated this on a question that whether the government will allow only registered exporter for the remaining shipment of cotton this season or will consider new application.
Maran said, "The decision to permit export of 5.5 million bales only in the current cotton season stands."
The entire shipment quota was to be completed by December 15. However, so far cotton exports have reached less than half the permissible limit on supply constraints. A Group of Ministers (GoM) had allowed 5.5 million bales for exports during the cotton season 2010-11 (October-September), but exporters failed to ship the entire quantity after unseasonal rains delayed arrivals in the spot market.
In a notification issued last week, the Directorate General of Foreign Trade (DGFT) said that it would issue the Export Authorisation Registration Certificate (EARC) to cotton exporters in place of the Office of Textile Commissioner, Mumbai with immediate effect.
While the government is sticking to its stance to allow shipping of 5.5 million bales of cotton export this season, some textile industry bodies including the Confederation of Indian Textiles Industry (CITI) and the Tirupur Exporters Association (TEA) have urged it to curb cotton exports pointing to the fact that India's actual production of cotton this year may be less than even 300 lakh bales against Cotton Advisory Board's earlier estimates of 325 lakh bales.
More recently, global rating agency Fitch had also stated that continued rise in cotton prices, driven by supply squeeze of the raw material, are likely to hurt margins of Indian textile manufacturers through the current cotton season.
"We welcome all cotton exporters (old and new) for registration of 2.5 million bales of unshipped cotton out of the 5.5 million bales permitted this year," Union Minister for Textiles Dayanidhi Maran told media on the sidelines an award function in New Delhi.
The minister stated this on a question that whether the government will allow only registered exporter for the remaining shipment of cotton this season or will consider new application.
Maran said, "The decision to permit export of 5.5 million bales only in the current cotton season stands."
The entire shipment quota was to be completed by December 15. However, so far cotton exports have reached less than half the permissible limit on supply constraints. A Group of Ministers (GoM) had allowed 5.5 million bales for exports during the cotton season 2010-11 (October-September), but exporters failed to ship the entire quantity after unseasonal rains delayed arrivals in the spot market.
In a notification issued last week, the Directorate General of Foreign Trade (DGFT) said that it would issue the Export Authorisation Registration Certificate (EARC) to cotton exporters in place of the Office of Textile Commissioner, Mumbai with immediate effect.
While the government is sticking to its stance to allow shipping of 5.5 million bales of cotton export this season, some textile industry bodies including the Confederation of Indian Textiles Industry (CITI) and the Tirupur Exporters Association (TEA) have urged it to curb cotton exports pointing to the fact that India's actual production of cotton this year may be less than even 300 lakh bales against Cotton Advisory Board's earlier estimates of 325 lakh bales.
More recently, global rating agency Fitch had also stated that continued rise in cotton prices, driven by supply squeeze of the raw material, are likely to hurt margins of Indian textile manufacturers through the current cotton season.
Wednesday, December 22, 2010
Extension of export deadline boosts cotton
Our Correspondent
Rajkot, Dec. 20
Cotton prices continued to rise across various markets on Monday as exporters tried to cover the needs and mills were also in fray.
On Friday, the Union Government said exports would continue until the permitted 55 lakh bales were shipped out of the country.
On Monday, prices increased Rs 700 to Rs 42,100-42,200 a candy (356 kg).
Cotton price at Rajkot was quoted on Rs 42,100-42,200 for a candy, compared with Friday price of Rs 41,500. Raw cotton was traded on Rs 900-930 a maund (of 20 kg), up by Rs 15 in Rajkot.
In Gondal, prices increased to Rs 900-930 a maund, up Rs 10 over Friday.
Mr Mahesh Patodia, a trader at Gondal market, said demand was heavy, leading to rise in prices.
Traders in Rajkot said that “Prices are increasing as mills are buying cotton more than exporters as they fear shortage of the material.”
A Rajkot-based trader said: “Price will move up more for coming 2 to 3 days and then it will be stabilise for some time.”
Mr Jaisukhbhai Patel, a trader at Gondal market, said arrivals were low compared with the demand.
“Arrivals are poor and the crop is feared to be low,” he said.
Meanwhile, the Cotton Association of India (CAI) has lowered its estimate for 2010-11 season (October-September) to 347.5 lakh bales against 357 lakh bales it forecast in October.
Gujarat, the largest cotton growing State in India is now estimated to produce 116 lakh bales, 4,00,000 bales short of the initial estimates.
About 70,000 bales of cotton arrive in Gujarat and 2.03 lakh bales arrive in India in a day.
Cotton Rises to Record for Second Straight Day on Global Fiber Shortfall
By Yi Tian and Jae Hur - Dec 22, 2010 1:43 AM GMT+0530 Tue Dec 21 20:13:50 GMT 2010
Cotton futures jumped to a record for the second straight day on speculation that global supplies will fail to keep pace with rising demand in China, the world’s largest user.
China’s custom agency said today that imports in November surged 31 percent from October. Shandong, the country’s second- biggest producing province, said on Dec. 17 that output dropped 22 percent this year from 2010. In India, the world’s No. 2 grower, production will be less than forecast, an industry group said yesterday.
“The crops are disappointing,” said Robin Rosenberg, a futures strategist at PFGBest, a brokerage in Chicago. “Prices will go even higher.”
Cotton for March delivery advanced by the exchange limit of 5 cents, or 3.2 percent, to close at an all-time high of $1.5912 a pound at 2:30 p.m. on ICE Futures U.S. in New York. The price has more than doubled this year, heading for the biggest annual gain since 1973.
“It’s not just new buyers that are driving prices up,” Rosenberg said. Investors unwinding bets on falling prices also helped support futures, he said.
Cotton may rise to $1.75 in a few weeks, he said.
Australian production this season may total 3.8 million bales, with some reduction to the forecast possible because of excess rains and flooding, National Australia Bank Ltd. said in a report today. “Indications suggest that crop loss is not major,” the bank said.
Stockpiles in the U.S., the biggest exporter, are forecast to plunge for a third straight year to the lowest level since at least 1960, government data show.
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