Indian Cotton Industry Outlook

Indian Cotton Industry Outlook

Market Outlook
by Shreya Anaokar Last Updated: 2022-06-03T17:03:39+05:30

India's cotton imports have gathered pace after the government exempted customs duty on the commodity on Apr 13. Indian traders and mills have bought 400,000-500,000 bales of cotton after the duty removal.

India's cotton acreage in 2022-23 (Jul-Jun) is expected to rise 9% on year to 13.2 million hectare. The stakeholders in the textile industry have urged the government to extend duty-free cotton imports till Dec 31 to boost textile exports and help address the dearth of raw material in the market.

Global production for the ongoing season is estimated higher at 26.4 million tonnes, compared with 24.4 million tonnes in the previous season. The rise has largely been attributed to higher production in Pakistan, Brazil and the US. In the US, cotton production is estimated at 3.8 million tonnes, as against 3.2 million tonnes a year ago. However, in India, cotton output is expected to fall to 5.8 million tonnes, compared with 6.0 million tonnes in the previous year. 

The US Department of Agriculture has revised its estimate for cotton ending stock in India to 8.3 million bales (1 US bale = 218 kg) for 2021-22 (Aug-Jul), from 8.0 million bales projected a month ago. The increase in India's ending stock estimate is attributed to lower exports in the current season. The country's exports are projected at 5.2 million bales, as against 5.5 million bales a month ago.

Persistently high prices in the domestic market have made India's cotton uncompetitive, weighing on exports of the commodity. According to trade sources, in the ongoing marketing year, around 3.5 million bales (1 bale = 170 kg) of Indian cotton were exported till March, sharply lower than a year ago. In Oct-Mar of 2020-21, India had shipped 4.3 million bales.

The Cotton Association of India has cut its production estimate for the 2021-22 (Oct-Sep) marketing season to 33.5 million bales (1 bale = 170 kg), from 34.3 million bales projected a month ago. The cut in estimate can be attributed to some crop loss because of excess rain in November in the key producing states that impacted quality of crop. Of the total crop, 26.3 million bales had arrived in markets across India till March. Estimates for exports in the ongoing marketing year have been maintained at 4.5 million bales. India shipped around 3.5 million bales of cotton till March.

The government has increased the maximum sale price (MSP) of genetically modified Bollgard-II Bt cotton seed for 2022- 23 (Apr-Mar) by Rs.43 to Rs.810 for a 450-gm packet, according to a notification.

The new season for cotton which started on Oct 1, is expected to be good for farmers as the market price of the fiber is currently more than the minimum support price, due to firm demand and a rise in global prices.

Sowing of cotton across the country has ended and farmers have sown the crop across 12 million hectares in the 2021-22 (June-July) kharif season, down 6% from a year ago.

India's cotton output in the 2021-22 (Oct-Sep) marketing year is seen at 36.2 million bales (1 bale = 170 kg), as per the median of estimates of 13 prominent players in the cotton value chain polled by Informist. 

 

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About the Author

Shreya Anaokar is a Content Writer at 5paisa. She has completed her Master’s in Finance and Graduation in Statistics from the University of Mumbai. 

Disclaimer

Investment/Trading is subject to market risk, past performance doesn’t guarantee future performance. The risk of trading/investment loss in securities markets can be substantial. Also, the above report is compiled from data available on public platforms.

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