Cotton exports to drop on lower Chinese demand


Coimbatore: Cotton exports from India, which touched 11 million bales of 170 kgs each in 2013-14 season (October-September), are likely to decline to 6-7 million bales in 2014-15 due to anticipated poor Chinese demand.

With China, the largest producer, consumer and importer of cotton, changing its policy on purchase of the commodity as well as yarn, exports from India would decline in the coming year, Sanjay K Jain, Vice President, Northern India Textile Mills Association (NITMA), told reporters here.

India is the top exporter of yarn to China, having shipped an equivalent of 9.9 million bales in 2013-14, but China would no longer purchase cotton for reserve requirements under a new policy unveiled recently, he added.

China, which built huge reserves of cotton after buying at a reserve price of USD 1.34 per pound when prices in the global futures market were ruling at over USD 2 per pound, is now saddled with high price stocks as international prices have fallen considerably, said Matt Earlam, a senior trader with London-based Plexus Cotton.

“Indian cotton is not competitive and will not have a big market share like in the past in China,” Jain said.

Moreover, the minimum support price for cotton in India is higher than local prices in China, he added.