USDA Predicts India's Cotton Exports to Match Imports for the First Time in Years

The USDA anticipated 2022-23 Indian exports declining by 500,000 bales to 1.8 million in its April World Agricultural Supply and Demand Estimates report, which was released on April 11.

"Lower domestic supplies, increased demand for foreign long and extra-long staple grades, and the Australia-India Economic Cooperation and Trade Agreement (ECTA) have all supported this recent dynamic," according to the USDA.

The Cotton Association of India (CAI) predicted in March that severe weather conditions would reduce crop output to near two-decade lows in 2022-23. "Indian crop size is much lower than anticipated." The country will produce a relatively little surplus. As a result, local pricing are firm, and there is no export parity," said a Mumbai-based dealer with a multinational trade house.

"Supplies would fall even further in the coming months. Exports will not pick up until the next harvest season begins in October. Although India was anticipated to be the third largest exporter internationally, with 1.8 million bales in 2022-23, this was still significantly below the 6.2 million in 2021-22," according to the USDA.

"Lower production may tighten the global balance sheet, creating global opportunities and challenges," said Bailey Thomen, StoneX Group's cotton risk management associate. "ICE cotton prices may rise if India increases imports and we see higher demand." However, due to economic conditions, demand has been slow."

On demand concerns, global benchmark U.S. cotton futures prices are on course for a third consecutive monthly loss and have down more than 1% this year.  According to the CAI, decreasing Indian supply might allow competitors such as the United States, Brazil, and Australia to increase cargoes to important Asian clients such as China and Pakistan, driving up local and worldwide prices.