India cotton export policy may depend on prices

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After two consecutive years of efforts to control the pace and volume of cotton exports, India lifted quantitative restrictions on cotton exports in August, 2011, and decided to continue with the policy for the 2011-12 marketing year also.

"Whether the policy (unrestricted exports) remains in place during the entire year will likely depend on price movements and domestic needs in the spinning industry," the US Department of Agriculture (USDA) said in its latest report.

Presently, market prices remain relatively high as traders await new crop supplies and early arrivals in northern India are reportedly of relatively poor quality, it said.

The USDA further said it has retained its export forecast for India at eight million bales of 170 kg each in 2011-12, as against 6.6 million bales of cotton last year.

Exports are seen higher as the country's cotton output is estimated at a record 35 million bales in 2011-12, as against 33 million bales last year, it said.

The report mentioned that the harvest in major northern and eastern growing areas has been delayed due to late rains.

Domestic buyers are currently expected to restrict cotton purchases to quantities sufficient to cover short-term needs, rather than enter into longer term buying arrangements that could increase exportable cotton supplies once harvesting gets under way, it observed.