1. Commodity News

Cotton Business Likely to Improve Further in Indian & World Markets

Abhijeet Banerjee
Abhijeet Banerjee

This season has been quite favorable for the Indian farmers and trade persons, in getting good returns from their produce. As the world economy recovers from the severe 2020 downturn, India’s export prospects remain bright. Similarly global cotton consumption is expected to grow in forthcoming months.

Domestic trades are also increasing as requirements of cotton products (for health and hygiene purpose) are on rise. Demand from clothing and textile industry is also improving. The Cotton Corporation of India (CCI) plans to export at least 10 lakh bales of cotton during the current season. There is continuous parity for selling overseas since Indian cotton remains underpriced versus its nearest competitor i.e. USA.

Another development from India’s cotton business perspective is that Pakistan may allow cotton import from India through land route as prospects of gradual restoration of bilateral trade ties have brightened, after the new ceasefire agreement along the Line of Control (LoC).

As per trade sources Pakistan has so far imported roughly 688,305 metric tonnes of cotton and yarn but still there lies a deficit of about 3.5 million bales, which needs to be offset through imports.Importers from Pakistan were forced to purchase from the United States, Brazil and Uzbekistan.Importing from India will be a cheaper option, and would reach Pakistan within three to four days only.

The USDA in its March report has estimated global cotton consumption to expand by 4.1 per cent in 2021-22 seasons, substantially above the long-term average rate of 1.7 per cent. This will be the second consecutive year when world consumption will exceed production.US cotton Consumption is expected to rise to 2.5 million bales, but still nearly 5 Lakhbales lower than 3 years prior. Exports from the US are expected to remain at 15.5 million bales. China’s 2021-22 imports are forecast at 11.0 million bales.

Import demand is expected to be robust in China due to expected growth in yarn and fabric usage, coupled with lower production in the country. Overall, strong cotton consumption growth in 2021-22 and tightening stocks are expected to keep average prices on the higher side during greater part of this year, in most of the world markets. Under current scenario it can be concluded that cotton business in forthcoming weeks or months have higher possibility to maintain a stable Indian or world markets. 

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