Exports of as much as 3.5 million 170-kilogram bales registered before the ban will be scrutinized, Commerce Secretary Rahul Khullar said today. The Directorate General of Foreign Trade will revalidate the permits within 10 days and a panel headed by Finance Minister Pranab Mukherjee will meet in two weeks to discuss exports, said Kiran Dhingra, textiles secretary. Fresh registrations will not be allowed until further notice, Khullar said.
India barred exports on March 5 to secure domestic supplies after sales exceeded the government’s estimate of the country’s exportable surplus. The ban spurred protests from growers, traders and China, its biggest customer. A resumption of shipments may add to global supplies and pressure futures, which have fallen 55 percent in New York in the past year.
“All the registration certificates will be scrutinized to see whether one is privy to any fictitious transactions,” said Khullar. “Shipments can take place if the transaction is transparent. We have to keep the interests of the farmers and the mills.”
The country suspended sales after shipments surged to about 9.5 million bales, already more than the 8.4 million bales the government had estimated as the surplus available for export.
Futures in India
Cotton futures trimmed gains in India. The April-delivery contract traded 0.8 percent higher at 830 rupees ($16.6) per 20 kilograms at 1:38 p.m. on the National Commodity & Derivatives Exchange of India Ltd., paring an advance of 3 percent.
Futures fell for a fifth day in New York, the longest losing streak since September. The May-delivery contract dropped as much as 0.9 percent to 88 cents a pound on ICE Futures U.S. before trading at 88.65 cents. The ban drove prices up by the daily limit on March 5 and to 94.24 cents the following day, the highest level since Feb. 17.
“Keeping in view the interests of the farmers, industry, trade, a balanced view has been considered by the Group of Ministers to roll back the ban,” Trade Minister Anand Sharma said in an e-mailed statement yesterday.
The government came under pressure to withdraw the curbs after Agriculture Minister Sharad Pawar said the prohibition would hurt planting prospects and an industry group in China said the move damaged international trade.
The world would have a record trade surplus of 2 million bales of 480 pounds (218 kilograms) if India exported all the cotton registered, Morgan Stanley analysts led by Hussein Allidina said in an e-mailed report on March 9. The brokerage lowered its 2011-2012 price estimate to 90 cents a pound from $1, citing weak global demand.
The ban damaged international trade, the China Cotton Association said on March 8. The association, supervised by China’s Ministry of Civil Affairs, “hopes that the Indian government revokes the incorrect policy,” it said. The Liverpool, England-based International Cotton Association, which handles contract arbitration, had said the prohibition will “have a major, detrimental impact” on global trade.
India is set to supply 20 percent of global exports in 2011-2012, the U.S. Department of Agriculture estimates. Shipments will probably be 7.75 million 480-pound bales, up from 5.1 million bales the previous year, out of a global total 38.77 million bales, the agency said. The estimate assumed the ban would remain in place, it said March 9.