India decides to cap cotton exports at 5.5 mn bales (India)

Finally, the Indian government has decided not to allow cotton exports above the cap of 5.5 million bales (1 bale = 170 kg) imposed in October 2010. This was decided at a meeting held yesterday between government officials to discuss increasing or maintaining the status quo.

India is the world’s second largest cotton exporter and its decision to cap exports to 5.5 million bales has had an impact on global cotton prices which have more than doubled when compared with the same time of the previous year.

Area under cotton acreage has shot up by 8 percent year on year in the current cotton season to 10.5 million hectares and official estimates put the 2010-11 cotton crops at 32.5 million bales against 29.5 million bales in the last season.

In international market, NY cotton March futures closed at 185 cents per pound and May Futures at 181 cents per pound. The Indian prices of Shankar - 6 raw cotton variety too have shot up to Rs 60,000 per candy (1 candy = 356 kg), yesterday, from just Rs 50,000 per candy on February 1.