Cotton production in India may drop by 1%, according to Fitch Ratings

15th September 2021, Mumbai:

Cotton output in India is expected to decline by 1% year on year to 28.3 million 480 lb bales in 2021-22 due to a shortage of rain during the major planting months of July and August (previously 2 percent growth).

The same has been asserted by Fitch Solutions, a prominent American credit rating organization. As of mid-September, rainfall in Gujarat, India's main producing state, was about 30% below its long-term normal, limiting the area available for planting and lowering output. On the other hand, the recent emergence of pink bollworms in Punjab's Bhatinda and Mansa would almost certainly reduce harvests.

Nonetheless, if the weather returns to normal and the pink bollworm epidemic is successfully managed, the output should rebound in 2022-23.

Fitch raised its world average cotton price prediction for 2021 to USc90.0/lb (from USc87.0/lb before). Fitch anticipates a 4.4 million 480 lb bale shortfall this year, up from a prior projection of 1.8 million bales, based on global supply and demand predictions.

This will put downward pressure on global markets while also providing some price support. Bangladesh and Vietnam will acquire considerable market share in cotton consumption in the long run, according to Fitch, as their textile industries develop.

“The move-in low-value manufacturing away from China is anticipated to help India, Indonesia, and Pakistan, boosting their share of global clothing exports,” the rating agency stated.

However, the speed of expansion will be slowed by a lack of preferential trade access to the US and EU markets, as well as increased labour costs. As authorities seek to decrease garment manufacturing operations and move up the value chain, China's demand will continue to decline.

Watch YouTube: https://www.youtube.com/channel/UCnQ6v9wBHyOlRPSDgJMsJaA