Cotton prices have jumped after India, the world’s second largest producer of cotton, banned the fibre being exported from the country.
The ban was brought into place yesterday (Monday), with the Financial Times reporting that the move was aimed at making sure India’s domestic textile companies had a sufficient supply of cotton.
As India closed off exports global cotton prices rose 4.5% with the absence of shipments from the world’s second-largest producer likely to affect the market. US cotton futures for May rose by 4 cents to 93.23 (59.04p) cents a pound.
India previously banned exports in 2010, which led to record hikes in cotton prices, with farmers and mills defaulting on deliveries as prices climbed and crashed.
However, analysts said this ban may not have as severe an effect because cotton stocks are growing globally and consumers are also buying more synthetic fabric.
Dhiren N. Sheth, president of the Cotton Association of India, told the Financial Times: “It’s an extremely bad decision. It will harm India’s reputation in the international market [and] we will suffer long term. More importantly, this is bad for farmers as the price of cotton will go down locally. We urge the government to rethink this regrettable decision.”