Home / Knowledge / News / Textiles / Ind-Ra revises 2014-15 Indian cotton sector outlook
Ind-Ra revises 2014-15 Indian cotton sector outlook
19
Apr '14
India Ratings & Research (Ind-Ra) has revised the outlook on the cotton sector to negative to stable for FY15 from negative. The agency has also revised the rating Outlook on cotton companies to Stable for FY15 from Negative. 
 
This is because the revival in domestic yarn production for exports and favourable government policies have helped stabilise cotton prices at a higher level, which will stabilise the credit profile of cotton companies. 
 
Cotton Corporation of India expects domestic cotton production to be at a decade high at 37.5 million bales in FY15 with yields at a six-year high, attributed to favourable monsoons and higher acreage of high-yielding Bt (Bacillus Thuringiensis) cotton. 
 
However, the agency believes that the adverse weather developments in January 2014 will lead to lower-than-expected actual production for the marketing year (MY October-September) 2013-2014. 
 
However for FY15, cotton prices are likely to remain at current levels with no more than a 10% change both ways. The attractiveness of Indian raw cotton prices (ginned) may continue in FY15 on account of an 8%-10% discount from global prices measured by Cotlook A index. 
 
Furthermore, a spurt in demand from garment manufacturing nations namely Pakistan, Bangladesh, Turkey and Vietnam is likely to offset the lower cotton demand from China in MY13-14. Additionally, Ind-Ra expects that the revival observed in domestic cotton yarn production in April-November 2013 to continue in FY15. 
 
Favourable government actions such as raising minimum support prices (MSP) by 32% and 21% for medium and long staple length cotton, respectively, since MY11-12 have supported cotton prices. 
 
Ind-Ra expects Indian cotton and yarn traders to maintain just-in-time inventory, given the uncertainty over the release of the Chinese reserve cotton and the possible pressure on cotton prices FY15 onwards. The agency expects MY13-14 to be another year of cotton surplus with global stock to use ratio remaining at a multi-decade high of 89.3%. 
 
China has nearly 59.7% of the global ending stocks. The Chinese government has indicated a desire to discontinue the current reserve policy and initiate trials for a target price subsidy scheme for MY14-15 to reduce the amounts of cotton imports into China. However, the cumulative impact will be a gradual moderation of cotton prices, which may play out over three to four years.
 
What may change the outlook?
 
Release of Chinese Cotton: 
Ind-Ra believes that China’s release of the reserve cotton into global markets will lead to an unprecedented fall in global and domestic cotton prices. This will adversely affect the operating profitability and liquidity of domestic cotton and yarn exporters and lead to a revision in the sector outlook to negative.
 
Stable Chinese Reserve Policy, Moderate Cotton Prices: 
A stable reserve policy of China along with a calibrated release of cotton and moderate cotton prices would lead to a revision in the sector outlook to stable.  
 

India Ratings & Research


Must ReadView All

Courtesy: Kai Pilger from Pexels

Apparel/Garments | On 26th Apr 2018

FOBAP in the Philippines trying for garments sector revival

The Foreign Buyers Association of the Philippines (FOBAP), a body...

German investors keen to invest in Pakistan: top official

Textiles | On 26th Apr 2018

German investors keen to invest in Pakistan: top official

A German traders delegation will soon visit Pakistan to explore...

Courtesy: Uster

Textiles | On 26th Apr 2018

Uster Technologies acquires Elbit Vision Systems

Uster Technologies has announced the successful closure of the...

Interviews View All

Cindy McNaull
Cordura

We have broad range of options in durable fabrics

Vidhyaa Shankar. S
A Ganapathi Chettiar

'The usage of knits is getting into the boundaries of woven fabrics'

Dharmendra Shah
Ozone PB Spintex Limited

‘We have made huge investments to ensure quality yarn production.’

Nitesh Mittal

Kusumgar Corporates is a leading manufacturer of technical textiles and...

Tom Adeyoola

Describing itself as the best body shape and garment fit company in the...

Liz Manning

<div><b>Liz Manning</b>, Business Development Manager at Catexel, has...

Eamonn Tighe
Nature Works LLC

Eamonn Tighe, Fibres and Nonwovens - Business Development Manager of...

Larry L Kinn
Suominen Corporation

Larry L Kinn, Senior Vice President - Operations Americas of Suominen...

Kai Poehler
Voith Paper GmbH & Co. KG

The glass mat industry is growing by five to eight per cent annually. Kai...

Sonam & Paras Modi
SVA

Sonam and Paras Modi's Sva Couture is synonymous with head-turning...

Karan Arora
Karan Arora

Bridal couture created with rich Indian heritage, exquisite craftsmanship...

Bani Batra

Bani Batra’s couture wedding collection is inspired by traditional Indian...

Press Release

Press Release

Letter to Editor

Letter to Editor

RSS Feed

RSS Feed

Submit your press release on


editorial@fibre2fashion.com

Letter To Editor






(Max. 8000 char.)

Search Companies





SEARCH

Leave your Comments


April 2018

Subscribe today and get the latest update on Textiles, Fashion, Apparel and so on.

news category


Related Categories:

Planning to Take the Leap towards
Sustainability?

Do you see sustainability as a route to business growth?

Yes No

Do you think the sustainability space has the needed tools and resources available for a business to lead change?

Yes No

Active Poll

Do you see sustainability as a route to business growth?

Yes
69.9%
No
12.6%
Skip
17.5%

Total Votes: 103

Do you think adopting a sustainable approach will be a profitable move for your business?

Yes No

Active Poll

Do you think the sustainability space has the needed tools and resources available for a business to lead change?

Yes
63.1%
No
29.1%
Skip
7.8%

Total Votes: 103

Do you want the world to know about your sustainability journey and your business’ environmental footprint?

Yes No

Active Poll

Do you think adopting a sustainable approach will be a profitable move for your business?

Yes
87.4%
No
8.7%
Skip
3.9%

Total Votes: 103

Thanks for your valuable feedback. Claim your free latest sustainability e-book.

Active Poll

Do you want the world to know about your sustainability journey and your business’ environmental footprint?

Yes
82.5%
No
7.8%
Skip
9.7%

Total Votes: 103


E-News Insight
Subscribe Today and Get the
Latest News Update in Your Mail Box.
Advanced Search