China new policy to hit India’s cotton exports

MUMBAI, Apr 17 (Reuters): Indian raw cotton exports are expected to plummet around 20 per cent in the next crop year, with demand from China fading as Beijing unwinds a controversial stockpiling scheme.
That would be greater than the nearly 6 per cent drop touted for this year, with the change in Chinese policy coming on top of rising cotton consumption in India and a spurt in exports of finished yarn, industry officials said.
Cotton markets around the world have been watching closely as China abandons a stockpiling scheme under which it has amassed more than 10 million tonnes of the fibre - around 60 per cent of global cotton inventories.
The policy had driven up import demand by removing cotton from the domestic market and pushing up local prices.
"Cotton exports have been falling year-on-year and we will not be able to export more than 7-7.5 million bales in 2014/15" said M.B. Lal, managing director of Shail Exports and former chairman of the Cotton Corporation of India. The country's cotton year runs from October to September.
China, the world's largest cotton importer, accounts for more than 60 per cent of total raw cotton exports from India. The rest goes to Bangladesh, Pakistan and Vietnam.
India, the world's No.2 producer and exporter of cotton, has shipped a total of around 8.2-8.5 million bales so far in 2013/14, expected to grow to around 9.2-9.5 million bales by September, industry officials said. Due to harvest cycles, the vast majority of exports typically occur in the first half of the Indian crop year.
The nation exported 10.1 million bales in the 2012/13 year, falling from 12.9 million bales the year before.
China in February imported 147,317 tonnes of cotton from India, down 20 per cent from the previous month. Beijing in January announced it would scrap cotton stockpiling, instead trialling direct subsidies for farmers.
"Chinese buyers have significantly reduced their buying from India in the past two months, as they are waiting for more clarity on the cotton policy in their home country," said Rahul Jitendra Shah, managing director of Acme International.
In a bid to speed up stockpile sales, China from the start of this month lowered the state sale floor price.