Arab Today, arab today global cotton prices up as india bans exports
Last Updated : GMT 14:59:17
Arab Today, arab today
Arab Today, arab today

Global cotton prices up as India bans exports

Arab Today, arab today

Arab Today, arab today Global cotton prices up as India bans exports

Mumbai - Arabstoday

  India said on Monday it had banned cotton exports with immediate effect, boosting global prices by about 5 per cent on fears that the absence of shipments from the world’s second-largest producer will reduce supplies. India had already exported 8.5 million bales, higher than the export quota of 8.4 million bales the government had set in January, due to strong demand from China. Each bale is 170 kg. This increase led India’s Directorate General of Foreign Trade (DGFT) to ban shipments, to ensure steady supplies for the local textile industry, the country’s second-largest employer and which accounts for some 4 per cent of GDP. Benchmark US May cotton futures climbed over 4.5 per cent on Monday to their highest level since Feb.29 after the announcement, erasing a fall of 2.13 per cent last week which was driven by a stronger dollar and ample global supplies. Prices in China, India’s top customer and the world’s largest user of the fibre, gained over one per cent. “Export of cotton has been prohibited till further orders,” the DGFT said in a statement. “Export against registration certificates already issued will also not be allowed.” The ban could spur China to buy more cotton from the United States, the world’s biggest exporter, and further boost prices. But analysts said plentiful global supplies — and weak demand for textile mills - would put a cap on prices and purchases. “India’s export ban is going to direct demand back to the US and that is going to help to put a floor on how low prices can go this year,” said Abah Ofon, analyst at Standard Chartered Bank in Singapore. But he added: “US stocks are comfortable and I don’t see this ban adding huge upside pressure on prices. What it will probably do is limit the decline in prices.” China will cut its cotton imports by 1 million bales to 16 million bales of cotton in 2012/13 from the previous year, the US Agriculture Department said. India is one of China’s major cotton suppliers ,  but analysts said the ban was unlikely to have much of an effect, because Chinese traders have already bought over 80 per cent of the Indian cotton they signed deals for in the current marketing year that will end in September 2012. Demand from cotton mills was also low due to the global economic downturn, which meant China’s cotton stocks were plentiful, said Dong Shuangwei, a senior researcher with Beijing Capital Futures. “China has already imported about 800,000 tonnes of cotton since September from India,” Dong said, adding that China had planned to buy 1.3 million tonnes from India. “That means the ban will only impact between 300,000 to 350,000 tonnes of cotton, which have not been loaded. China’s downstream demand is poor and there is still a large amount of cotton stocks at ports,” he added.  

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