Cotton is set to fall to the lowest in five years as demand slows in China, the world’s biggest consumer, and India heads for a record crop. Cotton has an oversupply situation both in the global market as well as in India. Demand is also weakening in countries like China. It’s going to be a challenge for India to export the same amount of cotton next year.
China’s imports fell 39 per cent in the first seven months from a year earlier. The country holds more than half of the global inventory. Slowing demand from China would reduce India’s exports next year even as the harvest flourishes. The harvest in India, the world’s second largest grower, may jump to a record 40 million bales from 37 million bales this year.
Prospects for yarn exports, mostly shipped to China, may also be hurt by weakening demand. This means demand for cotton from India’s spinning mills is set to decline further. Stockpiles in the US, the world’s biggest exporter, will probably more than double to 5.6 million bales of 480 pounds each by July 2015, the biggest increase since 1986. Global reserves are poised to reach an all-time high of 105 million bales.