Govt may lift cotton export limit on record crop

India, the second-biggest cotton producer and exporter, may boost its limit on shipments to foreign buyers as domestic output jumps 27 per cent to the highest ever, an association of growers and traders said.

“Everything points to the government raising the export quota when they assess the crop situation in December,” Nayan Mirani, a vice president of Cotton Association of India, said today in a telephone interview from Mumbai.

Production in the year that began last month may reach a record 37.5 million bales, above the association’s September estimate of 34.5 million and last year’s output of 29.5 million, he said. Demand from domestic textile mills may total 26.6 million bales, according to the group.

Increased exports from India may further erode gains in cotton prices, which surged this year after adverse weather damaged crops in China, Pakistan and the US cotton futures in New York have plunged 26 per cent since touching a record $1.5195 a pound on November 10.

“With expectations of higher output, one could expect the government to announce an increase in the export quota,” said Mike Stevens, an independent trader in Mandeville, Louisiana. The government on September 4 said it would limit exports to 5.5 million bales this year in a bid to meet domestic demand.

The textiles ministry halted registration of new export contracts on October 11 when applications reached the specified limit. Louis Dreyfus Commodities, the top cotton trader, and Cargill Inc. are among the companies that won permits.