By admin       2018-06-21

Chinese buyers would first try to replace U.S. cotton with machine-picked, non-contaminated fibre from Australia and Brazil, and then they would go for Indian cotton, said a Beijing-based trader with an international company. Indian cotton is not free of impurities such as bits of leaves and empty bolls, but if buyers have no other origin to choose from, they will pay extra to get rid of the contaminants, another China-based trader said. The extra cost would still be cheaper than paying a 25 percent duty on U.S. cotton imports, the trader said. China is familiar with Indian cotton, and previously would buy as much as 6 million bales a year, said Nayan Mirani, partner at cotton exporter Khimji Visram & Sons. At present, India also benefits from a depreciating rupee and nearness to China as compared with other competitors. Along with lower freight rates, shipments from India reach China in about two weeks compared to an average of three to six weeks from other producers Australia and Brazil, dealers said. "India will benefit not only because of the tariffs, but because emerging nations' currencies have generally lost value against the dollar in the last couple of months," said Gabriel Crivorot, an analyst at Societe Generale in New York. "This makes Indian cotton look much more attractive than it did a short while ago, relative to American cotton." U.S. cotton futures have lost 9 percent since the China duty was announced on Friday, while Indian cotton futures have dropped 4 percent. Indian exports would largely depend on surplus output, said Vinay Kotak, a director at Kotak Commodities, a Mumbai-based brokerage. "If India manages to produce a bigger surplus, then it can certainly export more as the demand is there."

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