Indian Cotton Exports To China On The Rise

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Indian traders have signed contracts to ship 800,000 bales of cotton to China as demand surged from the world’s biggest consumer of the fibre due to a rally in prices in China. “Chinese buyers were very active in the market in last few days,” said Atul Ganatra, president of the Cotton Association of India (CAI).

Cotton was sold at around 80-81 cents per pound on a cost and freight basis (C&F) to China, for shipments in March and April, he said on the sidelines of a cotton conference in Mumbai. India has already shipped around 600,000 bales to China so far in the 2018/19 marketing year that started on 1Oth Oct, he said. The United States, the world’s biggest exporter of the fibre, has cornered the bulk of Chinese imports for at least a decade. But China’s decision to impose a 25% import tax on cotton, has allowed India to grab a bigger share of the Chinese market. “Imports are nearly 10 cents (per lb) cheaper than domestic supplies for Chinese buyers,” said a London-based cotton dealer with a global trading firm. China has also been buying cotton from Brazil in the last few days due to depleting stocks, he said. Cotton ending stocks in China are forecast at 6.58 million tonnes in 2018/19, down from 7.43 million tonnes.

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Border tension
India’s cotton sales to neighbouring Pakistan have slowed down amid rising tensions between the nuclear armed nations, said Mohit Shah, director, Gill&Co., a leading exporter.  “Traders on both sides of the border are waiting for clarity,” Shah said. A few traders diverted cotton shipments for Pakistan to China due to the uncertainty, and China was paying around 2 cents per lb more than Pakistan, said CAI’s Ganatra. Around 100,000 bales of cotton shipments for Pakistan were delayed, but those would be shipped in the next few weeks, said a Mumbai-based dealer with a global trading firm. Despite good demand from China, India’s cotton exports in 2018/19 could fall 27.5% to 5 million bales, the lowest in a decade, due to a drop in production, CAI estimates.

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