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Poor sentiment drags down cotton buying

Global cotton consumption is expected to fall this year. Decrease in consumer confidence; trade war are two major reasons. China will continue to be the main cotton consumer. Mexico and Pakistan, meanwhile, will increase their imports by 48 per cent and eight per cent respectively.

India is expected to produce six million tons of cotton in 2019-2020. The surge in production due to a bigger cultivated area and a boost to yields from above-average monsoon rains is likely to bring down prices. But India still has to import cotton. This is because certain grades such as contaminated free certified cotton and extra long staple cotton are not produced in India.

For the moment though high cotton prices in India have kept the industry burdened with low earnings. Since Indian supplies are uncompetitive due to higher prices, buyers are giving preference to Brazil and the US. The expectation is that bumper cotton production in the new season could damp prices and make exports viable. The minimum raw cotton buying price has been raised by 38 per cent in two years even as global prices were corrected to their lowest level in more than three years.