Global cotton trade hit by India, China policies: ICAC Close.

Policies adopted by India and China, the world's top two biggest cotton producers, have affected global cotton trade and prices this year, according the International Cotton Advisory Committee (ICAC).

"This season, global cotton trade and prices are affected to a large extent by government policies in China and to a lesser extent by policies in India," the US-based ICAC said in a statement.

China imported in a big way to build reserve, while India has stopped further cotton exports, it said.

"China accumulated over 3 million tonnes of domestic cotton and at least one million tonnes of foreign cotton in its national reserve during the first eight months of 2011-12," the ICAC said.

The global body has pegged China's cotton imports at 4.2 million tonnes or up by 61 per cent from 2010-11.

"While the purchases supported both domestic and international prices so far, sales from the reserve could reduce Chinese imports and depress world cotton prices in the future," the ICAC said.

That apart, the impact of India's export ban on international cotton prices was limited in March. "However, the longer the ban remains in place, the greater its upward impact on world cotton prices could be," the ICAC noted.

India had banned cotton exports on March 5 briefly for a week. Currently, the government is not allowing fresh exports.

According to ICAC, world cotton trade is expected to rise by 9 per cent to 8.4 million tonnes in 2011-12, driven by near record imports from China.

The world cotton production is pegged at 26.96 million tonnes in 2011-12, higher than the global consumption of 23.13 million tonnes.

Source : economictimes.indiatimes.com