Govt May Raise Cotton Export Quota.

GoM meets tomorrow, with agri and commerce ministeries wanting more and textile ministry less.

The department of commerce proposes to raise the cotton export quota by 1.5 million bales over and above the existing 5.5 million bales in the group of ministers’ (GoM) meeting to be held on June 2.

Following a slowdown in domestic cotton consumption, traders and farmers proposed a rise of two million bales (170 kg each) in the quota. However, officials explained the textile ministry is concerned about the domestic market and fears the nascent demand rise in cotton consumption, seen following fall in prices, may be hit if the entire surplus is allowed for export.

The agriculture ministry, however, has been batting for export, since farmers and traders are accumulating losses with rising prices earlier and now falling demand. India, the second-biggest cotton exporter after the US, had in October last year permitted duty-free export of up to 5.5 million bales. Since the fourth week of March, the situation has changed and prices of the natural fibre have plunged sharply, due to piling of fresh stocks and huge carryover stock from the last season.

Cotton prices declined 25 per cent in the last month, from Rs 62,000 a candy (one candy is 356 kg) to Rs 47,000 a candy. According to an outlook report published by the Cotton Corporation of India (CCI), domestic prices for the popular S-6 vriety this week have been in the range of Rs 44,500 to Rs 45,500 per candy as against Rs 43,500 to Rs 45,000 per candy in the previous week. The cotton season is almost at its end. As a result, besides decline in seed cotton arrivals, the quality in current arrivals has gone down, says the report.

India’s cotton yield reportedly has plunged from 554 kg a hectare in 2007-08 to 475 kg a hectare in 2010-11. The acreage under cotton, in contrast, has risen from 9.41 million hectares in 2007-08 to 11 million hectares 2010-11. The CCI report further says the per-day arrivals are in the range of 30,000 to 35,000 bales, comprising 1,000 to 1,500 bales in Haryana, 10,000 to 14,000 bales in Gujarat, 7,000 to 8,000 bales in Maharashtra, 800 to 1,000 bales in Madhya Pradesh, 1,000 to 2,000 bales in Karnataka and 5,000 to 6,000 bales in Andhra Pradesh.

As on May 22, the cumulative arrivals were 29.42 million bales as against 28.45 million bales in the previous year.

According to the recent report of International Cotton Advisory Committee, a global association of government departments to promote cotton affairs, world cotton acreage during 2010-11 is estimated to increase by 13 per cent to 33.81 million hectares as against 29.98 million hectares during 2009-10. The world average yield in 2010-11 is projected up by one per cent to 733 kg per hectare as against 726 kg per hectare in 2009-10.

Source : Sify.com