Chinese demand lifts local chilli, cotton

China is emerging an important buyer of the country's commodities such as castor oil, cotton and chilli. At present, the Chinese demand has a huge impact on the domestic markets, which cannot be ignored while making demand and price projections.

The latest in the list of commodities high on the Chinese demand is chilli. This is because the chilli crop in south-west China was lower from September-end to early October, as it was damaged by floods. As a result, China, which is usually India's competitor in export markets, is now making inquiries about its chilli for imports.

Another chilli exporter Pakistan may also not be able to export chilli this year on account of lower crop. The news of Chinese inquiries has firmed up the prices in the domestic market by almost Rs 3-4 a kg. Guntur is currently quoting chilli at around Rs 62 a kg.

In cotton too, the world crop is lower, while the country is producing record crop this year. Currently, 2 lakh bales are arriving daily in local mandis. The Cotton Advisory Board had pegged the total output at 272 lakh bales.

"We expect the production to be around 280 lakh bales," said Arun Dalal, a leading player in the Ahmedabad cotton market. The world output was down by 4 per cent, and China, Pakistan and Bangladesh were buyers of the domestic cotton, he added.

The export demand was supporting the cotton prices which would have otherwise fallen on record crop, Dalal said. He expects the country's cotton exports to be around 60-65 lakh bales against 43 lakh bales last year.

Exports to China, Singapore and Thailand might be more than half of the total exports, Dalal added.

China is also stepping up its castor oil imports from the country. According to an Ahmedabad-based trader, Chinese demand is expected to be more this year.

The fact that castor oil prices are currently rising in the domestic market is largely because of Chinese demand. In the past two months, castor oil prices surged 20 per cent to Rs 1,800 a quintal in the Ahmedabad spot market. In Rotterdam (Netherlands), the commodity is quoting at $1,115 a tonne now compared with $950 a tonne two months ago.

The country exports 3 lakh tonne castor oil, and China consumes 40 per cent of that. This year, it exported 80,000 tonne, of which 55,000 was shared by China. As per the latest trend, China is importing more in flexi-containers.

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DRAGON FLY

China, which is usually India's competitor in export markets, is now making inquiries about its chilli for imports.

The news of Chinese inquiries has firmed up the prices in the domestic market by almost Rs 3-4 a kg

India's cotton exports will be around 60-65 lakh bales against 43 lakh bales last year

Exports to China, Singa-pore and Thailand might be more than half of the total exports