Cotton Price May Edge up on Exports.

MUMBAI: Indian cotton is likely to edge higher this week on ongoing exports and on hopes a cap on exports will be removed, but arrivals in growing areas may limit the gains, exporters and traders said on Monday.

"Exports are on their way and we are reviewing the domestic supply situation to decide on whether to free exports or not," said an official with the federal textile ministry .

Indian exports began in November and are mostly headed for China ahead of other importers due to strong demand from the textile industry in the world's top buyer.

Trade expects the cap of 5.5 million bales of cotton will be removed as supply increases. India will review its policy on cotton exports in December, Farm Minister Sharad Pawar had said last month.

"We have a bumper crop this year. The size may be up to 36 million bales... once daily arrivals pick up to 250,000 bales by mid-November and 300,000 bales by December, allowing further exports is possible," said Bhadresh Mehta, managing director of Bhadresh Trading Corp, a leading cotton exporter.

India delayed cotton exports for the 2010/11 season by a month to Nov. 1 after late rains delayed arrivals in growing areas. The cotton season usually starts from October.

Arrivals of cotton have gained traction in most parts of India, Indicating an abundant supply situation.

"After Diwali holidays, the regular arrivals have picked up in all the cotton growing states from the second fortnight of November 2010," said an official with Cotton Corp of India.

In India, the most common Shankar-6 variety was trading at 42,500 rupees per candy (of 356 kg each) on Monday, data with the Cotton Association of India showed.

The arrivals stood at 2.78 million bales (of 170 kg each) as on Nov. 6, compared with 2.77 million bales during the same period in the previous year, an official with the state-run Cotton Corp of India said.

Source : economictimes.indiatimes.com