Wires

India's state-run cotton buyer could ramp up purchases to support prices

Rajendra Jadhav

* CCI could buy 10 mln bales in new season

* Output expected to jump 20% in new season

* Exports uncompetitive from India as global prices drop

JALGAON, India, Sept 23 (Reuters) - India's state-run cotton buyer could purchase as much as 10 million bales from farmers in the 2019/20 season to support prices amid an expected sharp increase in production, the head of Cotton Corporation of India (CCI) said on Monday.

That would be nearly 10 times CCI's cotton purchases in the 2018/19 season, which ends on Sept. 30.

CCI buys cotton from farmers whenever prices fall below the minimum buying price set by the government.

India's cotton production in the 2019/20 season, which starts on Oct. 1, is likely to jump as much as 20% from a year ago to 37.5 million bales, the highest in five years, due to a bigger cultivated area and a boost to yields from above-average monsoon rains.

Higher purchases by CCI could keep local prices firm and limit exports from the world's biggest producer of the fiber, supporting global prices that have fallen 18% so far in 2019.

"We have made infrastructure ready for procurement. Buying may be around 10 million bales," P. Alli Rani, chairman of CCI told Reuters on the sidelines of a conference.

This season, CCI purchases were relatively low as prices in the local market were trading above the minimum buying price for the most period.

Traders expect a drop in local prices in coming months due to higher cotton production and as India's exports have become uncompetitive following a drop in global prices as the trade war between the United States and China intensified.

Cotton supplies in the next season could be delayed by a few weeks due to heavy rainfall in key growing areas in the last few weeks, which is set to delay harvesting, Rani said.

In mid-November supplies are expected to pick up and could pull cotton prices below the government-fixed support price of 5,550 rupees ($78.37) per 100 kg, she said.

(1 Indian bale = 170 kg)

($1 = 70.8140 Indian rupees) (Reporting by Rajendra Jadhav; Editing by Susan Fenton)