Government delays decision to allow more cotton exports as cotton traders wait eagerly to take advantage of higher global prices
The uncertainty over increasing cotton exports and the delay in issuing licences for export may result in excess domestic supply of cotton that could pull down the current high prices, according to traders. But textiles manufacturers are concerned that unseasonal rain could curtail production and an increase in exports would only compound the problem.
Cotton has been in short supply since April, but prices started moving up in the middle of the year on hopes of increased exports to exploit the higher prices internationally. A candy of cotton (356 kg) sold for as high as Rs47,000 in October compared with Rs23,000 in the corresponding period a year ago.
In response, the government capped cotton exports at 55 lakh bales and that for cotton yarn at 720 million kg. However, this has not reduced prices much, as traders believe that the export limit could be raised any time.
“If the government does not increase the limit of cotton export from the current ceiling of 55 lakh bales, it may lead to an increased supply in the domestic market and impact cotton prices,” says Dhiren N Sheth, president of the Cotton Association of India (CAI).
V Ravichandran, vice president of South India Cotton Association told Moneylife, “If cotton supply increases in the domestic market, prices could come down by as much as Rs1, 500 to Rs2, 000 per candy.” Cotton prices are currently at around Rs40,000, still high on expectation of an increase in the cap on exports. Also, recent reports have suggested that the record cotton production of 325 lakh bales expected earlier may not materialise due to unseasonal rain that has destroyed crops in major cotton-growing states.
While the government permitted export of 55 lakh bales from 1st November to 15th December, only about 25 lakh bales have been shipped out of the country, and this is being seen as a possible reason for the delay in increasing the export limit.
But, Prabhakar Kelkar, general secretary, Bhartiya Kisan Sangh, attributed the lower export to the late decision by the government on the quota. “The government should have issued the permission for export of cotton in August. Due to the delay in the government’s decision on the export limit, exporters could not meet the target of 55 lakh bales by 15th December. Now this is affecting the decision on the next slot of exports,” Mr Prabhakar told Moneylife.
Last year, India exported 85 lakh bales, when cotton production was 295 lakh bales.
Commerce Secretary Dr Rahul Khullar, was quoted as saying that the decision on exports would be taken mid-December, but nothing has happened yet. Messages to the Ministry of Commerce and the Ministry of Textiles on the exports issue were not answered.
The textiles industry is opposed to any increase in cotton exports as it could push cotton prices in the domestic market up further. The Confederation of Indian Textiles Industry (CITI) has said there is no justification to setting an export target on anticipation of production, when the output of a commodity like cotton is entirely dependent on weather conditions.
“We estimate that production would not be more than 300 lakh bales, after unseasonal rain has slowed down production of cotton. Now, after exporting 55 lakh bales, we would have 245 lakh bales and domestic requirement is more than 260 lakh bales, so our stock position in the country would be very tight,” IJ Dhuria, head of raw materials, Vardhman Textiles Limited told Moneylife.
A senior official of Cotton Corporation of India thought that the recent rain would have only a little impact, reducing cotton production by 5-7 lakh bales. The Cotton Association is still hopeful of a production of 347 lakh bales in 2010-11.
CITI argues that the government should allow an increase in exports only after the domestic requirement is fulfilled. “Cotton arrivals are already late. There is a season of cotton production and arrivals, but export can be done anytime. Cotton should be exported after February, by which time we would have a better idea about the availability of cotton and how much surplus can be exported,” says DK Nair, secretary-general of CITI.
If they were determined to share their past with us, the least they ought to have done was to make the recounts funny and interesting. Instead, they have saddled us with most boring pieces of adverts ever
I really don't know what I did when I was 25. And even if I did, I can't put it out here-it's a family site, you see. Well, the reason I say this is because Kotak Mahindra has turned 25. And has been asking all sorts of people this question as part of its celebratory campaign.
And they have released a zillion commercials where people are telling us stuff they did whey they were 25. One uncle reports he used to sport a ponytail. Another executive boasts he used to enjoy vada pav. A child declares she will make more money than dad when she turns 25. Another senior citizen says when he was 25 he used to chat with people face to face, and not on 'facebook'. Another dude says he lost his
passport when he went to Bangkok at the age of 25. And this boring charade goes on.
This must be one of the most juvenile and yawny ad campaigns of 2010. There are some very serious problems with this idea and its execution. Here goes.
One, if Kotak Mahindra is 25 years old, what's in it for me, the consumer? How does that change my life? Will every investor have his/her account credited with Rs25K bonus? They could simply have had a grand office party where all the staffers have a rocking time. Why tell that to us? This is nothing more than the paid Page 3 private party pictures that appear in colour supplements of newspapers.
Two, the approach. So okay, you turned 25. And let's assume you are very happy and want to share the joy. Tell us what special deeds you've done in all these years so we can be impressed. What financial milestones have you achieved? What's the unique thing Kotak Mahindra does? That other banks don't do? In short, we are happy for you, but please tell us why we must bank with you. Nothing of that sort gets answered. All we have is some people telling us stuff they did when they turned 25. What's that gotta do with the bank? A totally senseless approach.
Thirdly, even assuming despite all this Kotak Mahindra wanted to have a public bash, and was determined to share their past history with us, the least they ought to have done was to make the recounts very witty, funny and interesting. So if nothing else, the least that could have happened was we smiled a bit. But even that was not to be. They have saddled us with most boring pieces of adverts ever.
By the way, dear Kotak Mahindra, I do now recall what I did when I was 25. I smashed the window pane of a bank whose staffers were full of themselves and cared two hoots for their customers. Happy 25!
The Indian market is likely to see a flat-to-positive opening today on unassuming global cues. Wall Street, which opened after an extended Christmas holiday, closed flat on Monday as a blizzard moving across the northeastern region dampened investor sentiment. Markets in Asia were mixed in early trade on Tuesday on mixed economic data from Japan. The SGX Nifty was up 23 points at 6,030.50, up from its Monday’s close of 6,007.50.
The market opened with good gains on Monday, despite mixed cues from its Asian counterparts. The market touched its day's high in mid-morning trade, luring investors to book profits at higher prices, and this resulted in the indices moving gradually lower. As the Chinese market closed down, the Indian benchmarks turned into negative territory in the post-noon session. The market ventured into the green for a short time in late trades, but got bogged down by selling pressure, and ended marginally lower.
The Sensex ended 44.73 points (0.22%) lower at 20,028.93 while the Nifty settled below the 6,000-mark at 5,998.10, losing 13.50 points (0.22%) over its previous close.
Markets in the US closed steady on Monday as a blizzard moving across the northeastern region dampened investor sentiments. However, stocks recovered from an early decline led by financials. Meanwhile, retail sales, excluding autos, rose to $584 billion from 5th November through 24th December from a 4.1% gain last year, according to MasterCard Advisors’ SpendingPulse, which measures retail sales by all payment forms. The numbers include sales made over the web.
The Dow fell 20.73 points (0.18%) at 11,552.76. The S&P 500 added 0.74 points (0.06%) at 1,257.51. The Nasdaq rose by 4.25 points (0.16%) at 2,669.85.
Markets in Asia were mixed in early trade on Tuesday on mixed economic cues from Japan. Factory output in November rose 1% from October, when it fell 2%, according to Trade Ministry data released today. Consumer prices in Japan fell 0.5% in November, down for the 21st month. The development might prompt the central bank to revise its price projections.
The Jakarta Composite gained 0.19%, the KLSE Composite rose 0.65%, the Straits Times added 0.15% and the Seoul Composite surged 0.81%. On the other hand, the Shanghai Composite declined 0.78%, the Hang Seng fell 0.89%, the Nikkei 225 was down 0.38% and the Taiwan Weighted shed 0.03% in early trade. The SGX Nifty was up 23 points at 6,030.50, up from its Monday’s close of 6,007.50.
The Reserve Bank of India on Monday announced a reduction in the Statutory Liquidity Ratio (SLR), requirement for lenders to keep a portion of deposits in government securities, cash and gold, by one percentage point to 24% for regional rural banks (RRBs).
This is in line with the similar cut announced in the monetary review for banks earlier this month as part of its measure to bring more liquidity into the system. The new requirement for the RRBs is effective from 18th December.