MUMBAI (Commoditiescontrol) - India is likely to produce 28.5 million bales cotton (480lb each) or 365 lakh bales (170kg each) on 11.8 million harvested hectares during 2016-17, according to U.S attaché report.
Indian farmers may sown cotton on 11.8 million in 2016-17. Planting decisions are largely driven by expected price realization, but additional factors such as the relative cost of production of competing crops, water availability, central/state government support (including anticipated minimum support prices (MSP)) and a timely monsoon are crucial factors.
Cotton consumption during 2016-17 is forecast at 24.2 million bales (365 lakh Indian bales). USDA forecasts cotton and cotton yarn prices will remain competitive as mills will have ample fiber supplies to cater to both domestic and export markets. The textile sector remains in relatively good condition compared to a few years ago and industry capacity continues expanding though utilization for many mills is expected lower as slack capacity is being generated. Despite China reducing its volume of cotton yarn purchases from India in MY 2015-16, exports of cotton yarn, fabrics, and made-ups (blankets, bed linens, furnishing articles, etc.) remained strong.
USDA for MY 2015-16 and MY 2014-15 cotton consumption are 24.6 million bales and 24.759 million respectively. The MY 2015-16 estimate is based on USDA analysis and is 100,000 bales greater than the current USDA official estimate whereas the MY 2014-15 estimate is based on data from the Textile Commissioner and is 259,000 bales greater than the USDA official estimate.
For MY 2016-17, the average monthly cotton consumption is forecast at 1.95 million bales (25 lakh Indian bales) per month average cotton consumption for MY 2015/16 is estimated at 1.98 million bales (254 lakh Indian bales).
Cotton exports for 2016-17 was forecast forecast at 5 million bales (64 lakh Indian bales). Indian merchants and exporters are increasingly diversifying trade to newer markets such as Indonesia, Taiwan, Turkey and Thailand, but their dependence on traditional exports markets in South Asia especially Pakistan and Bangladesh remains important. While Bangladesh is completely dependent on cotton imports for its textile industry, Pakistan imports limited quantities as domestic production is able, generally, to cater to its local mill demand.
Sources report that poor rains and pest issues in 2015 drove mills in Pakistan to import the second highest quantity of cotton from India since 2007. In the past decade, China has been the largest market for Indian raw cotton exports, but with large carryover stocks, limited mill demand and preference for machine picked cotton, Indian exporters among others have had to explore new markets in a short span of time.
India’s share of exports to China has dropped from almost 80 percent in 2011 to 30 percent in 2014, while at the same time the share of exports to neighbors Pakistan and Bangladesh has risen from 14 percent in 2011 to over 70 percent in 2014. The neighboring export markets have become even more important for India as Vietnam the next largest export market for Indian cotton enters into the TPP free trade agreement creating additional competition with other major cotton exporting countries.
Cotton imports in MY 2016-17 are forecast at 900,000 bales (11 lakh Indian bales). The import estimate for MY 2015-16 is 100,000 bales lower than USDA estimate as mills report limited demand in export markets with more focus on production of blended yarns reducing cotton offtake.
(By Commoditiescontrol Bureau; +91-22-40015533)
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