MUMBAI: Indian cotton is likely to edge up this week tracking higher global prices and on good domestic demand, but an arrival delay that spilled into exports, already capped at 5.5 million bales, may limit gains, traders said on Monday. “Domestic prices are on the boil. Our exporters are getting very good prices even as only 5.5 million bales are allowed for export,” said an official with the federal textile ministry.
Indian cotton dealers, buoyed by tight global supplies and healthy demand from China and Pakistan, are seeking $1.32 to $1.35 per pound for December-January shipments, 14-17 cents over New York futures, three exporters told Reuters on Friday. “Demand from China is good. They are buying at around 132 cents per pound,” said Chirag Patel, chief executive officer at Jaydeep Cotton Fibers Pvt Ltd, a leading exporter. India has suspended the online process of registering cotton exports after receiving applications equal to the stipulated exportable surplus of 5.5 million cotton bales, said a statement on the Textile Commissioner’s website on Monday.
“If there would be a comfortable stock situation later we will review the decision,” the official said. ICE Futures US cotton futures vaulted to a record high on Friday at $1.198 per pound, smashing the old record set in 1995. International cotton has risen 65 percent since July when it was trading at 73 cents as strong demand, tight stocks and investment fund buying poured into the market. India, the world’s second-biggest producer and exporter of cotton, has delayed exports by one month until November 1, after late rains delayed the harvesting process.
“Local textile manufacturers are also lapping up available cotton to stock up before prices rise further,” said an official with the state-run procurer Cotton Corporation of India. Arrivals have begun in north India and will gain momentum in other parts of the country by end of October. In India, the most common Shankar-6 variety was trading at 41,000 rupees per candy (of 356 kg each) on Monday, up more than 77 percent compared with a year ago, data with the Cotton Association of India showed.
Confederation of Indian Textile Industry, a local textile industry body has requested the government for a delay in exports till January 1, 2011 to stem higher prices. Cotton output in India, the world’s second biggest producer, is likely to jump to a record 35 million bales in 2010-11, higher than earlier estimates of 32.5 million bales, on better yields.
