India's cotton exports are expected to fall sharply in the 2022-23 season, which predicted that exports could match imports for the first time in about two decades, according to the United States Department of Agriculture (USDA).

The USDA's April World Agricultural Supply and Demand Estimates report projected Indian exports to drop by 500,000 bales to 1.8 million, roughly equivalent to its import forecast, due to lower domestic supplies, increased demand for foreign long and extra-long staple grades, and the Australia-India Economic Cooperation and Trade Agreement (ECTA).

The Cotton Association of India (CAI) had already warned in March that Indian stocks could fall to a near two-decade low in the 2022-23 season, as adverse weather conditions curtailed crop yields. The country was going to produce a very small surplus, leading to firm local prices and no parity for exports. The situation is expected to persist until new season crops start from October.

While India is still forecast to be the third largest cotton exporter globally, with a projection of about 1.8 million bales in 2022-23, this figure is well below the 6.2 million exported in 2021-22. India’s lower production might tighten the global balance sheet, creating worldwide opportunities and challenges. If India increases imports and demand rises, ICE cotton prices might rise, although demand has been slow due to economic conditions.

Meanwhile, global benchmark U.S. cotton futures prices are on track for a third straight monthly fall, having declined over 1% so far this year on demand concerns.

The CAI had earlier warned that lower Indian output could allow rivals such as the U.S., Brazil, and Australia to increase cargoes to key Asian buyers such as China and Pakistan, while pushing up local and global prices.