India’s Directorate General of Foreign Trade announced today that the country has banned all cotton exports without offering any reason for the ban, according to the Financial Times. The embargo affects exports against registration certificates that have already been issued as well.
Indian textile companies have said they are losing competitiveness because of high cotton prices in India and the trade regulator is believed to have banned cotton exports to push down prices domestically.
India is the world’s second largest cotton producer and this is expected to impact global supplies of the commodity and drive up international prices. Cotton futures have been up 4.53 per cent to 92.23 cents in the U.S.. But this puts pressure on Indian farmers that will see the price of cotton fall domestically. Weak cotton prices have been linked to farmer suicides in India.
Here’s a chart of cotton’s performance since the announcement: