India has decided to build cotton reserves of 2.5 million bales of 170 kg each to meet the needs of the domestic textile industry, a government statement said on Wednesday State-run Cotton Corporation of India (CCI) has been directed to intervene in the market to ensure stability of prices, the statement said.
"This has been necessitated by the fact that the textile industry impacted by a slowdown is unable to carry stocks beyond 15 days," the statement said. CCI is expected to purchase about 1 million bales per month for the next 2 months, it said. Government and trade sources said last week India was unlikely to allow new cotton exports when ministers meet and may not lift the ban at least until July. Cotton exports have put the commerce and agriculture ministries at loggerheads, with influential coalition ally Farm Minister Sharad Pawar asking Prime Minister Manmohan Singh to lift the ban to help farmers.
Output seen down "India's 2012/13 cotton production is forecast at 32.3 million 170 kg bales (25.2 million 480 lb bales), down 2 million bales. Area is expected to drop 10 percent, but will still be the third highest on record. Farmers are likely to switch to competitively-priced alternative crops while seeking to diversify their crop mix and risk in response to India's topsy-turvy cotton export policies. India banned cotton exports on March 5, 2012, and is currently conducting a review of export registrations that took place prior to the ban. Some additional exports are expected, but no new export registrations are being accepted. 2011/12 exports are estimated at a record 11.75 million 170 kg bales (9.2 million 480 lb bales) leading to one of the lowest stocks-to-use ratios in at least the past 20 years. Exports are forecast to drop by nearly 50 percent to 6 million 170 kg bales (4.7 million 480 lb bales) in 2012/13."
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