Speculation dries post cotton export registrations

Within a month of introduction of registration of cotton export contracts by the Textile Commissionerate, speculators are having a hard time. According to Confederation of Indian Textile Industry (CITI), besides a good monsoon, it is the registration that has led to a fall in cotton prices by close to Rs 1,000 per bales.

Sometime back, the textile industry had requested the government for registration of cotton export contracts with the Textile Commissionerate that would help keep a check on excessive exports that could squeeze the domestic supply of the commodity. Ever since the registration has begun, D K Nair, secretary general of CITI said that the speculators have been discouraged to hoard the commodity.

"More than a good monsoon, it is the decrease in speculation and hoarding of cotton that has led to a fall in its prices. Cotton prices have come down by atleast Rs 1,000 per bales ever since the registration of export contracts begun," said Nair.

According to CITI, prior to implementation of registration of contracts, speculators would book cotton on the pretext of export orders but would instead hoard the commodity that led to artificial price rise in the market. "More than monsoon, it was this hoarding that led to shortage in domestic supply of cotton thereby raising the prices. Now that the exact export details have to be submitted to the commissionerate, speculators are not able to hoard cotton, bringing prices down significantly," added Nair.

The confederation had led the industry in demanding such a registration since it believed the move would help monitor and, need be, take policy decisions in restricting exports to a certain limit.

According to J N Singh, textiles commissioner and joint secretary in Ministry of Textiles, so far the commissionerate has registered cotton export contracts of over 60,000 bales. The commissionerate is soon going to offer registration facilities online. "Registration of contracts has begun keeping the speculators at bay inspite of the confidentiality that our department offers to the applicants," said Singh.