Cotton prices have declined to a 12-month low due to a 3 percent increase in global production, reaching 25.41 million tonnes, as reported by the International Cotton Advisory Committee (ICAC). However, global consumption has decreased by 0.43 percent to 23.35 million tonnes. Warehouses worldwide are currently holding an inventory of approximately 14.5 million tonnes, as per ICAC data.
It is anticipated that Brazil, Argentina, and Tanzania will likely produce substantial crop yields, whereas the United States, Australia, and Greece are expected to have lower crop outputs.
India impact
Cotton production in India for the 2023-24 season (October to September) is projected to be at its lowest level in over 15 years, with an estimated output of 29.5 million bales, where one bale equals 170 kilograms. This decrease is attributed to El Nino-induced dry spells during August and September, which have led to a reduction in the acreage devoted to cotton cultivation. In 2022, India's domestic cotton production stood at 31.9 million bales, while annual consumption was approximately 31.1 million bales. This drop in production may have implications for India's cotton industry and its position in the global market.
Because of lower production, India will likely have to import some 2.2 mln cotton bales, which is a three-year high, Ganatra told Informist. "The main reason for loss in production is that cotton sowing reduced by 5 percent compared to last year," Ganatra said. The area under cotton in 2023-24 (Jul-Jun) fell to 12.4 million hectares from 13.1 million hectares in 2022-23, according to the agriculture ministry. Apart from lower acreage, cotton crop yield fell drastically owing to attacks from the pink bollworm across North India. Production of cotton in the north zone, which comprises Punjab, Haryana, and Rajasthan, was initially estimated at 6.3 million bales by regional associations. Read full report here
"In July, crop conditions in the north zone were very good and the (regional) associations were expecting 6.3 million bales. But due to this pink bollworm attack, they are now expecting only 3.8-4.3 million bales," Ganatra had said on October 29 at a conference in Hyderabad.
Overall, India's annual cotton production has seen a 6 percent decline YoY with prices slumping to a 6 percent decline on week and 12 percent on month.
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