India’s cotton exports are likely to decline 20 per cent this year. One reason is China is expected to start sales from its cotton reserves from March and would continue offering 30,000 tons a day until August. China’s total stocks, including those in the private sector, are forecast to reach nine million tons at the end of 2016-17, accounting for 53 per cent of world stocks. This will definitely hit cotton demand from India as Chinese buyers have been active over the last few years.
Exports are not expected to cross 5.5 million bales this year against last year’s 6.9 million bales. Despite a cotton acreage 9.6 per cent less than the previous year, better yields in major cotton growing states have resulted in higher output estimates. India’s cotton production in 2016-17 is estimated to reach 32.51 million bales, up from 30.01 million bales a year ago.
The global market balance is going to remain tight, which could keep prices elevated. If cotton prices decline, imports will go up. But China’s auction may cause prices in the global market to decline. So the result is that Indian exporters will not be able to reap the benefit of high international prices.