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India : India eyes flood hit Pakistan's cotton market (August 30, 10)

India : India eyes flood hit Pakistan's cotton market

A week after India removed cotton exports ban, a golden opportunity awaits it's exporters as flood hit Pakistan's textile industry demanded more imports from India.

According to Cotton Association of India, Indian exporters will seek to take advantage of the situation in Pakistan to help meet demand from its textile industry.

Pakistan's devastating floods have destroyed up to a fifth of the country's cotton crop, handing an opportunity to exporters in neighboring India who are eyeing the shortfall.

Get the latest updates on India's spices market, production and export trends, spot and futures markets. Subscribe to Commodity Online Info Service. India imposed restriction oncotton exports to keep domestic prices down.

Armed with a bumper crop after a good monsoon, Indian groups are expected to begin exporting to Pakistan from October.

Some mills are already calling for regulated exports however, fearing a spurt in demand from Pakistan could send prices soaring in India. Analysts warned that India should export only surplus.Cotton prices in India are at a peak for the year, up by 12 per cent in August compared to levels last month.

Analysts forecast India will produce nearly 32 million bales of cotton in 2010-11, against 28 million bales in 2009-10. Farm output is expected to rise in India owing to plentiful monsoon rains-a great relief to hundreds of millions of Indian farmers who struggled with the weakest rains in 37 years in 2009. Pakistan'stextile sector, which accounts for 60 per cent of the country's exports, is likely to be hit due to damage to the cotton crop, which could be 20 per cent below usual, according to analysts.

Analysts said Pakistan will be short of about three million bales of cotton this season. The flooding in Pakistan may result in agricultural losses of nearly three billion dollars, its agriculture ministry has said, with the main farming region of Punjab particularly damaged.

Pakistan has been importing cotton from India for the past few years now and is one of the main importers of cotton from India, which is the second largest producer of the crop worldwide after China.

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