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.
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