India govt to review export caps on cotton in February

NEW DELHI (Commodity Online) : With a better cotton crop output in the offing, the India government will review export ceiling of cotton and cotton yarn in the coming month.
The group of ministers headed by finance minister of India, Pranab Mukherjee will review the export ceiling of 5.5 million cotton bales and 720 million kg cotton yarn, as production this year is likely to hover at 34 million bales; a bale is 170 kg.
The cotton prices had surged in the domestic economy threatening the manufacturing competency of Indian textile industry. This led the government to fix a cap on cotton exports that in turn sparked a commodity war with Pakistan, with India scrapping 1 million bales worth orders from Pakistan importers and Pakistan blocking onion exports to India.
Since April last year, the cotton  exports had to be restricted on account of poor domestic availability. On October 1, 2010, the exports were allowed with a cap.
Chinese demand had been fostering prices coupled with a global production shortfall of 15% even as India had a great output of 32 million bales. This cocktail triggered export surge and domestic industry that consumed 26-27 million bales of cotton had to ring the alarm bells.
Cotton is costing 42,000 a candy (356 kg) in domestic markets as of now.

(Source: http://www.commodityonline.com/news/India-govt-to-review-export-caps-on-cotton-in-February-36070-3-1.html)