Decision on cotton export today

1.5 million bales under consideration, spinning units averse to exports.

The spinning industry is keeping its fingers crossed ahead of tomorrow’s meeting between the Commerce Ministry and exporters to review the export of cotton.

A decision will be taken on the demand of allowing exports of another 15 lakh bales of cotton to exhaust the excess stocks.

But, the spinning units are averse to any such decision as further exports may create scarcity of cotton supplies in the domestic market.

Confederation of Cotton Textiles Industry (CITI) Chairman Shishir Jaipuria, said the country has an ending stock (as on 30 September 2011) of 2.75 million bales of cotton according to the balance sheet prepared by the Cotton Advisory Board. An additional export quota may put the spinning mills in a tight spot.

Dilip Bhai Patel, president of All Gujarat Ginners’ Association, said, the traders, ginners and exporters have a surplus of 5 million bales and 4 million bales, so there is sufficient stock.

But a senior official in Cotton Corporation of India confirmed that the unsold stock with the traders is about 45 lakh bales and about 1.5 million bales may be brought to the market by the farmers.

The sentiments in the global market are low for cotton and cotton yarn in anticipation of a higher yield and increase in the area under cotton cultivation this year. But countries such as Bangladesh, Pakistan and China need cotton to make value addition as there is a shortage of cotton worldwide.

Mukund Chowdhary, president of North India Textile Millers Association (NITMA), said if the export quota for cotton is revised, it will only benefit the middlemen as the farmers do not have excess stock.

Despite lifting the quota barrier on the export of cotton yarn since April 1, 2011, the spinning mills are fishing in troubled waters as they are pressed to sell yarn in the international market at an unviable price (Rs 180-Rs 185 ex-mill for 30s comb against the minimum viable price is Rs 220 for 30s comb).

“Cotton prices have softened to about Rs 45,000 a candy from Rs 62,000 a candy. If the exports are resumed, the millers will have to suspend operations. Given the high cotton prices at present, they would not even recover the variable cost component for the spinning industry.”