1. Commodity News

Cotton demand dips as Indian traders blame wrong US projection

Saumy Deepak Tripathi
Saumy Deepak Tripathi

In the start of June, Textile Exchange has released a report where it had called that the change from Natural Cotton to Sustainable Cotton should be encouraged in order to help farmers and also increase their incomes. A month later the world is seeing a slump in the demand of cotton demand due to weak demand and increased production.

The Indian traders allege that it was due to the wrong projections of the United States Agricultural Department (USDA) that the pressure on the Indian industry has increased. Due to the lockdown several logistical difficulties were experienced in the supply chain which has caused a backlog of cotton in the market. According to the figures released by the Cotton Advisory Board that number stands at 48.41 lakh Indian bales (170 kg each) but estimates by the USDA have put the figures at almost 200 lakh bales.

This has led to chaos in the market and the cotton producers are finding it hard to survive. The wrong projections will not only hurt farmers but will also hurt every stakeholder in the entire supply chain. USDA had also projected wrong figures for the Chinese cotton market stating that its import was less than the expected as it reduced from 7500 bales to 7250 bales. The figures by the Chinese cotton market were contradictory to these findings and thus the industry asked it governments to raise this issue with the Chinese government.

The Indian traders are hoping for the same as these projections will incur them huge losses and thus the figures should be corrected as soon as possible to avoid any disruptions in the market and supply chain.

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