Exports may be 2 million bales, 62 percent less than 5.24 million bales permitted to be shipped by Dec. 15, said Unupom Kausik, head of the cotton business at Olam Agro India Ltd., a unit of one of the world’s three largest suppliers.
Reduced supplies from the Asian country, the second-biggest shipper, may tighten global inventories amid rising demand from China. Cotton prices have climbed 51 percent this year in New York, reaching a record $1.5195 cents a pound on Nov. 10, amid plunging stockpiles in the U.S., the leading exporter.
Lower shipments “will definitely impact global as well as domestic prices,” Kausik said in an interview.
India’s government in mid-October set the export quota for the 2010-2011 season at 5.24 million bales and said the entire quantity must be sold in 45 days starting Nov. 1. Louis Dreyfus Commodities, Cargill Inc. and Olam are among companies that won permits. The limit may be reviewed in December, Farm Minister Sharad Pawar said last month.
About 4.69 million bales have arrived in domestic markets since Oct. 1, down from 4.81 million a year ago, as heavy rain slowed harvests, Cotton Corp. of India, the country’s biggest buyer, said yesterday. Daily arrivals were 140,000 bales of 170 kilograms each, it said.
‘Fewer Goods’
Shippers need as many as 120,000 bales daily to fill the export quota and mills require 2.2 million bales every month, Prem Malik, vice chairman of the Confederation of Indian Textile Industry, a trade body, said in a phone interview.
“We’re talking of about 9 million bales to be purchased in total during the Nov. 1-Dec. 15 period,” he said. “Fewer goods are being chased by too many. This kind of a crisis is being seen for the first time since 1982-1983.”
Prices of Shankar-6, a medium staple variety, jumped to a record 47,000 rupees ($1,031) per candy in October, from 23,000 rupees a year earlier, said D.K. Nair, secretary general of the textile group. A candy weighs 356 kilograms.
The surge has led to some exporters defaulting on their commitments as they are unable to buy cotton locally at prices lower than those they had agreed to sell at, Olam’s Kausik said. Only 800,000 bales have left the country as of Nov. 16, he said.
Apparel Protests
“The confirmed sales which are in place between buyers and sellers, and are profitable, will be performed upon,” he said. “Unprofitable sales have already been defaulted upon.”
India’s apparel industry, comprising 50,000 units, closed their facilities for a day on Nov. 19 to protest against yarn prices that have almost doubled in the past year, the Apparel Export Promotion Council said in a statement that day.
The group called for a ban on shipments on cotton yarn to bolster local supplies, as even the nation’s output is forecast to increase.
Production may reach 35.7 million bales this season after farmers planted a record area, theCotton Association of India said Nov. 16. That compares with the group’s estimate of 34.45 million in September and 32.55 million predicted by the nation’s Cotton Advisory Board.
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