Cotton output in India is expected to surge after the heaviest monsoons witnessed in 25 years at a time when prices are near their weakest across the last three years. The crop may reach at least 36.5 million bales of 170 kilograms each in the cotton year starting October 1, according to Vinay N Kotak, director at brokers Kotak Commodity Services in Mumbai.
That is more than 15 per cent higher than the output a year before, according to estimates from the Cotton Association of India (CAI).
More supply from India will hurt farmer incomes and benefit textile manufacturers. Rising shipments from the country will intensify competition among global exporters as they struggle to grab a bigger share of the Chinese market, according to a news agency report. Indian textile exporters are also facing a decline in overseas demand because of US tariffs.
Rainfall was more than 40 per cent higher than the long-term average from June to September in Gujarat, while in Maharashtra, rain was 30 per cent above normal. Planted area also increased to 12.77 million hectares from 12.1 million a year earlier, according to official statistics till September 27.
The country’s cotton exports may climb to 5 million bales this year from 4.4 million bales in 2018-19 and sales to China may advance to as much as 1.5 million bales from 1.2 million a year earlier, Kotak said. India is facing increased competition in almost all markets and the government should provide some incentives to make exports attractive, he added.
Traders have so far contracted to ship about 100,000 bales from the new crop, compared with 500,000 bales to 600,000 bales a year earlier, he added.
