What does 2015-16 season hold for India’s Cotton?

India's Cotton output in 2015-16 is likely to decline. But this will only be a limited decline and imports by China is also likely to fall further.

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India’s Cotton production is likely to show a decline in 2015-16 season which commenced from October 1. But will it affect the market and prices in a big way?

Cotton Association of India (CAI), a mjor trade body, the other day released its latest output estimates. As per the CAI data, India’s estimated cotton output in 2015-16 will be 370.50 lk bales. This figure is 12.25 lk bales lower compared to 382.75 lk bales in 2014-15.

Rating firm ICRA, in its latest report, has said the decline is likely to be the lowest amongst the major cotton producers. This limited output will result in India surpassing China and emerge as the world’s largest cotton producer in 2015-16.

Moreover, CAI’s estimates show that supply for 2015-16 will be 463.15 lk bales and consumption 325.00 lk bales. This will result in a surplus of 138.15 lk bales.

The surplus should be viewed against the backdrop of limited cotton exports from India. Demand from China, the largest buyer of Indian cotton, is going downhill. ICRA expects 30 per cent decline in imports by China in 2015-16.

So even as India’s Cotton production will decline for the second straight year in 2015-16, Cotton availability in India will remain comfortable and is likely to improve.

By Sreejith Kamalanayanan

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