Good News! Export Outlook Turns Brighter for Indian Cotton

Cotton export prospects from India have improved of late as prices of Indian cotton are the cheapest in the world in present term therefore making foreign sales economically viable for the country. Indian cotton is the cheapest in the world compared to the US, Brazil and Australia and buying of Indian cotton from Vietnam, Bangladesh, Indonesia and China is improving gradually. In the exports market Indian cotton is presently available at 60-65 cents/pound, roughly 8-10 cents cheaper than the closest competitor i.e. the US. The Indian Cotton Association (CAI) has recently estimated India’s cotton exports to touch 65 lakh bales this year against its June estimate of 40 lakh bales. Last year, India exported 50 lakh bales of cotton as per the Association.   

Under present scenario India is emerging is a major supplier of cotton to the world as the global cotton output is expected to decline, while India remains the only major producer which is likely to see a rise in the production. The USDA and International Cotton Advisory Committee (ICAC) have estimated a rise in production in India versus last year. In its cotton monthly report for October, ICAC has revised global production to 24.6 million tonnes (mt) from 2019-20 estimate of 26.02 MT, implying a fall of 1.42 MT or close to 5 per cent. The estimates have been lowered for almost all major producers except for India where production is expected to rise to 6.2 MT versus last year’s production of 6.07 MT. This estimation is based on rise in the acreage.   

Global consumption estimates for 2020/21 is presently seen at 24.3 million tonnes as per the ICAC which reflects a rise of around 1.4 MT of rise versus 2019-20 consumption projections of 22.87 MT. According to the ICAC India’s increased production in 2020/21 should be advantageous in offering additional opportunities for exports. China is expected to lead the global cotton consumption at 7.8 MT — equivalent to 30 per cent of total global consumption as per the ICAC. But the estimate is seen supporting Indian cotton industry. The global consumption data show a brightened export prospects for Indian cotton. 

India’s consumption is estimated near to 5.1 MT this year and this makes China and India together representing approximately 50% of global cotton consumption. Exporters now expect Cotton exports from India to appreciate by 20-30% this year in light of improving global demand.   Export demand is likely to remain strong in coming months due to enhanced global demand for mask and surgical gown production along with cheaper offers of Indian cotton versus its nearest competitors.