The DGFT has notified prohibition on export of cotton on March 5, 2012 till further orders with immediate effect. 94.75 lac bales have been exported till March 4, 2012.
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India’s cotton exports reached 91 lac bales in February 2012 with over 120 lac bales of cotton registered for exports. Cotton arrivals in the market as of March 6, 2012 have reached 245 lac bales against a crop size of 340 lac bales. Registration for cotton export have been about 50% of cotton arrivals. Currently Textiles mills are carrying their lowest ever stocks in the past decade. Given the tight liquidity position in the industry, it is not possible for them to procure larger quantities to cover their future requirements at this stage.
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With only 25 percent of cotton to arrive in the markets, and nearly 7 months of the cotton season ahead, the scenario ahead pointed to a shortage of cotton for the domestic industry, huge rise in domestic price of cotton and inability of textiles mills to build up carryover stocks for the cotton year 2012-13.
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The Textiles Policy strives to balance competing interests of the value chain. The informal Group of Ministers had in April 2010 therefore laid down that a carry forward balance of 50 lac bales should be maintained and only surplus cotton stock should be exported. Exports at 94 lac bales has brought down carry over stock for next season to 36 lac bales. Even with reduced carryover the availability for consumption is down to 230 lac bales equivalent to 19 lac bales a month against an installed capacity of 23 lac bales.
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Cotton Corporation of India has been advised to protect farmer’s interests by procurements in all mandis of India where the prices fall below MSP prices. Textiles Mills have also commenced procurement operations across the country. The price situation is unlikely to be adversely affected by the current decision for long.
Comparison of Cotton Supply and Demand 2010-11 and 2011-12 – CAB Forecasts and Actuals
In Lac Bales of 170 kgs each
|
CABActuals
2010-11 |
CAB forecast 2011-12 |
Revised on basis of Trends till March 2012 |
| SUPPLY |
|
|
|
| Opening Stock |
40.50 |
48.30 |
32.59 |
| Crop |
339.00 |
345.00 |
340.00 |
| Imports |
5.00 |
6.00 |
8.00 |
| Total Supply |
384.50 |
399.30 |
380.59 |
| DEMAND |
|
|
|
| Mill/ SSI Consumption |
245.91 |
240 |
230.00 |
| Non Mill Consumption |
26 |
240 |
20 |
| Exports |
80 |
84 |
94 |
| Total Offtake |
351.91 |
344.00 |
344.00 |
| Carry over Stock |
32.59 |
55.30 |
36.59 |
Textile Machinery Spares 