The government has no plan to ban export of cotton yarn for now. Today, the Union textile ministry clarified that cotton yarn exports had not been banned and there was no proposal to do so.
“Putting quantitative restrictions or imposing a tax on export is a restrictive measure, while we believe in maintaining equilibrium for all,” Textiles Secretary Kiran Dhingra said on Tuesday while addressing the media.
For 2011-12, yarn exports are pegged at 900 million kg and the total exports so far have still been much lower than that.
In Mumbai’s yarn market, prices fell on Tuesday by Rs 5-7 a kg following a fall in cotton prices yesterday and on rumours of an export ban on yarn. In 40- and 30-count yarn, where exports are happening, prices fell to Rs 200 and Rs 180 a kg, respectively. However, as cotton prices have revived after the announcement of ban being reviewed on Friday, some pull back in yarn can be expected.
Bharat Malkan of Mumbai-based I B Yarns said, “In fine counts yarns like 60 counts and above, which are mostly exported to Europe, there is not much demand, as the destination markets are in recession. However, coarse yarn export demand could provide support to the market.”
He said in case of finer count yarns, prices have stabilised at higher levels because of lower production in the south due to power cuts. While north India spinners are in a comfortable position as they produce mostly coarse yarns.
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Cotton prices up
Meanwhile, during the day, cotton prices recovered after agriculture minister Sharad Pawar and Gujarat chief minister Narendra Modi opposed the export ban.
Arun Dalal, a trader based at Ahmedabad, said, “Following hope of intervention by the chief minister, in the Gujarat market, cotton was down to Rs 32,500 a candy (356 kg) which was trading at Rs 33,000 yesterday.”
On the Multi Commodity Exchange, cotton prices were down nearly four per cent in the morning to Rs 15,900 a quintal but soon after reports of Union agriculture minister Sharad Pawar intervening in the ban decision, prices improved. And, when the textiles secretary said the export ban decision would be reviewed, the near-month contract reached as high as Rs 17,130 a quintal, before settling at Rs 16,690.
Cotton prices soared in New York, too, after India abruptly banned exports, a move that traders said could send Chinese buyers flocking to the US market. India is the world’s second-biggest cotton exporter.
Cotton futures prices shot up on the ICE exchange in New York. The benchmark contract for May delivery rose the daily maximum of four cents in early trade to 92.23 cents per pound and held there for the rest of the session.