* Cotton imports seen at 1.5 mln bales for this year
* Traders expect govt to sell most of its stock by end-Oct
* Traders estimate India has about 2.8 mln bales of stocks (Adds prices, details)
By Naveen Thukral SINGAPORE, March 22 –
India's cotton imports could reach 1.5 million bales this year, falling short of industry estimates of more than 2 million, as expected sales from government stockpiles will limit the demand for overseas supplies, traders said on Friday.
An Indian textile industry official this month estimated that cotton imports could jump two-thirds to more than 2 million bales (340,000 tonnes) in 2012/13, as a seasonal output slowdown and stockbuilding push domestic prices higher in the world's second-largest producer. But that picture could change after India said on Wednesday the state-run Cotton Corp of India would offload stocks in the open market.
"India's imports are not going to be that much now, as the government is going to start selling its stockpiles," said Ritesh Agrawal, managing director of cotton trader Wisdom Cotton, based in the eastern Indian city of Kolkata.
On Wednesday, New York cotton prices posted their biggest daily decline in two months, as news of sales by India and China prompted investors to take profits from prices that have surged in the commodity's longest bull run in two years.
Prices extended losses on Thursday, down about 1 percent to a one-week low as news of the sales kept roiling the market, and were on track for a weekly drop of nearly five percent, the steepest since October. "Earlier we were expecting imports to go up to around 2 to 2.5 million bales," Agrawal said on the sidelines of a cotton conference in Singapore.
"If the Indian government starts selling, then I think imports will be much lower, at around 1.5 million bales." India's ruling cabinet has yet to decide how much of its stocks to sell in a dispersal expected to kick off from April.
"We expect the government to sell most of its stock by the end of October," Agrawal said. "They need to buy cotton from the new crop in October or November, so they have to sell." Traders estimate India has about 2.8 million bales of stocks.
The government has faced calls from mills to sell down in order to cool soaring prices, which are near year highs. "India's cotton imports are a function of prices. If the government starts selling cotton, then local prices will come down and there will not be any need of imports," said another trader based in Singapore, who declined to be identified in line with company policy. (Source: Reuters)