India will ship 8,00,000 bales of cotton to China. Demand has surged from the world’s biggest consumer of the fiber due to a rally in prices in China.

India has already shipped around 6,00,000 bales to China so far in the 2018-19 marketing year that started on October 1. Exports from the world’s biggest cotton producer will help China in augmenting supplies, but could weigh on global prices.

The United States, the world’s biggest exporter of the fiber, has cornered the bulk of Chinese imports for at least a decade. But China’s decision to impose a 25 per cent import tax on cotton, in retaliation for tariffs enacted by the US, has allowed India to grab a bigger share of the Chinese market. China has also been buying cotton from Brazil in the last few days due to depleting stocks. Cotton ending stocks in China are forecast at 6.58 million tons in 2018-19 down from 7.43 million tons. China’s buffer cotton stocks began depleting since 2015.

Despite good demand from China, India’s cotton exports in 2018-19 could fall 27.5 per cent, the lowest in a decade, due to a drop in production, low closing stocks and higher minimum support prices.