Changing crop preferences may impact India's cotton output: USDA

FAS Mumbai, in its report, stated that India's cotton production is expected to be 25.4 million bales of 480 lb (or 32.5 million bales of 170 kg/5.5 million tonnes). The current farmgate prices for seed cotton in March 2024 have seen an improvement from the previous month but are nearly six per cent lower than the previous year, which could deter farmers from planting cotton. However, the anticipation of a normal monsoon season is projected to enhance the yield by two per cent to 446 kilograms per hectare in the upcoming season.

According to the report, India's cotton consumption is projected to be 24.5 million bales of 480 lb (or 31.4 million bales of 170 kg), an increase of two per cent from the previous year. A significant recovery in the exports of value-added cotton products, especially cotton yarn and fabric, in the first six months of 2023-24 signifies a recovery in mill consumption.

As of March 7, the Cotlook A-Index has increased by five per cent since October 2023 (the start of the Indian marketing year), while Indian ex-gin prices and domestic cotton yarn prices have risen by 2.5 per cent and one per cent, respectively, during the same timeframe. Since October 2023, the Indian spot prices (Shankar-6) have increased by three per cent, from 92 cents per pound to 95 cents per pound. Currently, Indian prices are seven per cent lower than the Cotlook A-Index, making them highly competitive. This supports the consumption forecast and a projected rebound in the exports of yarn and textile products. Year-to-date exports (August-February) of cotton yarn by volume are 114 per cent higher than the previous year, and fabric exports are 11 per cent higher.

Textile production increased by three per cent, but apparel production decreased by two per cent in January 2024, according to the Index of Industrial Production - Quick Forecasts for January 2024, compared to the previous year. Cumulatively (April-January), textile production has slightly improved by 0.4 per cent, but apparel production has declined by 17 per cent. Any increase in consumption is expected to lead to a recovery or compensate for the considerable output losses of the past two seasons.

For the 2024-25 season, cotton exports are expected to reach 2.4 million bales of 480 lb (or 3.1 million bales of 170 kg). Higher carryover stocks will provide India with an exportable surplus, and the depreciation of the rupee will facilitate export opportunities for cotton and cotton products. Following the recent revocation of import duty on extra-long staple (ELS) cotton, imports are predicted to be 20 per cent higher at 2.4 million 480 lb bales.

Fibre2Fashion News Desk (KUL)