Is India Considering Another Export Ban?
An already jittery market is buzzing as rumors of a new cotton export ban in India – which would be the third in the last three years –are starting to swirl.
September 26, 2012
An already jittery market is buzzing as rumors of a new cotton export ban in India – which would be the third in the last three years –are starting to swirl. Nothing is certain yet, and due to the political sensitivity of the topic, sources are not willing to comment publicly on the topic. But that doesn’t mean people aren’t talking about it in private.
Spotty rains have hampered India’s cotton production, which at 32 million bales (170 kg) is expected to reflect a decrease of 9% from the prior year. As a result, the Minister of Textiles is already recommending that a new cotton export ban be implemented until it become clear that the domestic market has access to the cotton it needs.
“As of right now, there has been no official government decision made about the export policy for the coming cotton season,” one source, who asked to not be identified, told Cotton International. “So right now, technically, there is no such thing as an export ban.”
He went on to point out that India will hold its general elections next year, and securing the votes of farmers – the country’s single most influential bloc of voters – is of the highest priority to politicians. “If we take that fact into consideration, and juxtapose it with the current world prices which seem to be going lower by the day, the government cannot afford to ban exports and create a glut in the local market. That would ultimately lead to a crash in raw cotton prices.”
But that doesn’t mean it won’t happen. He acknowledged that India’s reputation has taken a hit in the world cotton market largely due to “flip-flop government policies,” adding that the intentions of Indian officials should become clearer next week. Until then, however, trying to predict what will happen is “like throwing darts, in a dark room, with a blindfold on.”
Stay tuned, as Cotton International will be following this critically important story as it develops.