Cotton output falls on crop switching, waning demand

livemint.com:

NEW DELHI : India, one of the world’s largest cotton producers, risks becoming a net importer after both exports and production registered a record decline in the current financial year amid weak demand for textile products in the West due to the long-drawn Ukraine war. The United States Department of Agriculture (USDA) expects India’s cotton exports to slip to its lowest in 19 years during the current crop season between October 2022 and September 2023 as it expects farmers to shift to other profitable crops such as oilseeds and pulses.

Indian cotton yarn exports had hit a decadal low of 664,000 tonnes in FY23, compared to the highest exports of 1.38 million tonnes in FY22. The value of cotton yarn and handloom product exports also fell 14% in May 2023 compared with the year-ago period.

Cotton exports had earlier slipped nearly 75% in FY23 to $678.75 million compared with $2.65 billion in the last financial year.Notably, cotton yarn manufacturers had witnessed record profits due to strong demand after the end of the covid-19 pandemic. Besides, experts said demand was also boosted by lower domestic cotton prices compared with global prices, along with a US ban on cotton products from China’s Xinjiang region on human rights grounds.

However, demand came under pressure in FY23 and declining domestic production added to fears of India turning into a net importer. To be sure, India textile production caters largely to the domestic markets.

Experts also attributed the decline to demand slide in China after a patchy recovery from covid-19. Historically, China has been the largest buyer of Indian cotton yarn but post the US ban, Bangladesh took its place and became the largest importer of Indian cotton yarn in FY22 and FY23.