Industry And Cluster | News & Insights

India to see record cotton consumption & strong exports in 2021-22

Published: October 14, 2021
Author: Manali bhanushali

India’s 2021-22 cotton consumption is forecast at a record 25.5 million bales and exports are projected at the second-highest level in 8 years at 5.8 million. This level of total use is forecast to lower ending stocks to 12.4 million bales, down nearly 4 million compared with the record level two years prior, according to US Department of Agriculture (USDA).

“A robust recovery from the COVID-19 pandemic and stronger domestic consumption and exports of cotton yarn, fabric, and products are projected to support a significant downfall in stocks,” the Foreign Agricultural Service of the USDA said in its latest monthly report on ‘Cotton: World Markets and Trade’.

Cotton stock levels in India nearly doubled to a record two years ago primarily due to two factors. First, production soared 3.0 million bales while consumption fell over 4.0 million. Second, India’s seed cotton prices fell below the Minimum Support Price (MSP), which drove record state purchases and storage of cotton lint in cotton year (CY) 2020 by the Cotton Corporation of India (CCI).

However, due to record sales the next season, i.e. in 2020-21, CCI’s record stock levels quickly fell. Mills and exporters were eager buyers, with 2020-21 domestic consumption rising 4.0 million bales and exports at their highest in seven years at 6.2 million, the USDA report said.

India’s projected record consumption in 2021-22 is driven by the expected strong gross domestic product (GDP) growth as well as rising textile exports. The International Monetary Fund’s October Update projected India’s GDP growth at 9.5 per cent in 2021 and 8.5 per cent in 2022, which is expected to support domestic consumption of cotton textiles and garments.

Further, the world GDP growth projections of 5.9 per cent in 2021 and 4.9 per cent in 2022 are expected to support exports of cotton lint, yarn, fabric, garments, and home furnishings.

In 2021-22 season, CCI is not expected to purchase a significant quantity of domestic cotton, due to spot prices exceeding the MSP procurement price (₹5,762 per 100 kg of seed cotton). “Fewer government purchases and less storage coupled with the second-highest level of total offtake (consumption plus exports) are expected to prevent stocks from ballooning back to historically high levels,” the report concluded.

Outlook for Global Cotton:

Meanwhile, USDA as raised the 2021-22 outlook for global cotton production with larger crops in Pakistan and Turkey more than offsetting lower crops in the United States and India. Use is lowered with consumption falling in China and Vietnam, more than offsetting higher consumption in Pakistan and Turkey. Restrictions on China’s electricity use and COVID-19 restrictions in Vietnam (August through September) result in lower projections for consumption. Global trade is down on lower imports for Pakistan and Vietnam more than offsetting greater China demand. Exports are lowered for India and Brazil, with the former having significantly lower supplies compared with last month.

For the US, 2021-22 production is lowered 0.5 million bales to 18.0 million. Exports and use are unchanged, with ending stocks down to 3.2 million bales. The US season-average farm price is raised 6 cents to 90 cents per pound.

Related Posts

Rario Unveils Digital Collectibles in Honor of Master Blaster Sachin Tendulkar’s 50th Birthday Celebration