In-Depth Analysis | Market Reports | News & Insights | Product Report

Indian Farmers to Pile More Pressure on Downtrodden Cotton Market

Published: June 19, 2020
Author: Millionaires


As of June 12, growers in the world’s top cotton producing country had planted cotton over an area 23 percent larger than last year, farm ministry data showed encouraged after the government raised its buying price to support farmers hurt by a near two-month lockdown that shut textile mills.

Plans by Indian farmers to plant a record amount of cotton this season will pile fresh pressure on global cotton prices already hard hit by the coronavirus pandemic.

Global cotton prices have fallen over 11 percent this year, as the global outbreak hit consumer demand and forced clothing shops to close, extending declines made during the US-China trade war when China curbed purchases of US cotton.

In addition to weaker demand from brands and retailers, high levels of inventories for the current and next season as well as lower polyester prices will weigh on cotton prices, the International Cotton Advisory Committee (ICAC) said in a report.

Purchases by New Delhi have made the fibre crop more profitable than corn and soybeans, said Arun Sekhsaria, managing director of exporter D.D. Cotton.

India’s cotton prices are now the cheapest in the world, according to the Cotton Association of India, and the ICAC expects India’s cotton exports to rise to 0.89 million metric tonnes in the 2020/21 marketing year from 0.53 million metric tonnes in 2019/20.

But analysts said low pricing is not enough to offset the hit to demand from widespread store and factory closures amid the pandemic.

“For the major South East Asian spinning hubs, we are already beginning to see reduced appetite for cotton imports,” said Charles Clack, an analyst at Rabobank Australia & New Zealand.

The US Department of Agriculture last week cut its estimate of global cotton consumption for the 2019/20 marketing year to 102.65 million bales from a forecast of 105 million bales in May.

It also lifted its estimates for ending stocks by 5.2 million bales to 104.67 million bales for 2020/21. Too much leftover inventory at the end of the crop year could further hurt cotton prices, analysts said.

“I don’t see demand (rebounding) to pre-COVID levels anytime soon,” said Peter Egli, director of risk management at British merchant Plexus Cotton.

Related Posts

Dwindling global demand for cotton textile products continues to hit cotton prices – SIMA