* China scrapping cotton stockpiling
* Expected to crimp its demand for overseas cotton
* India exports could drop around 20 pct in 2014/15
By Meenakshi Sharma
MUMBAI, April 17 Indian raw cotton exports are
expected to plummet around 20 percent in the next crop year,
with demand from China fading as Beijing unwinds a controversial
That would be greater than the nearly 6 percent 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
percent 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 percent 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 percent 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.
Meanwhile, consumption of raw cotton by Indian mills has
climbed to 25.8 million bales in 2013/14 from 25 million bales a
year ago due to rising demand from textile makers as the global
economy shows signs of picking up.
"Consumption by cotton in mills is increasing sharply in
India, as many new spinning units are coming up to meet rising
demand from textile makers," said Arun Kumar Dalal, a cotton
trader from Ahmedabad in Gujarat state.
"In the next crop year, mills' consumption is expected to
touch 30 million bales."
In 2011/12, demand from mills totalled 22.3 million bales.
And Indian shipments of yarn, a value-added product used by
textile mills, are likely to rise by around 10 percent in the
financial year 2013/14, market participants said, further
crimping overseas demand for raw cotton. Some Chinese buyers
have stepped up yarn purchases to avoid higher taxes on raw
(Editing by Mayank Bhardwaj and Joseph Radford)