Atherley: game-changing solutions

First choice

The US is India’s largest exporting partner for cotton apparel. Global brands and retailers have always looked up to India for textile products, especially made from cotton. US cotton has been the first choice, whenever mills need to export high quality yarns. “India has been amongst the top two users of Supima, an extra-long staple cotton grown in the US,” Narang affirmed.

Though India is the second largest producer of cotton after China, with its production touching 35.7 million bales in the 2019-20 cotton season, it still imports about 2 million bales of long and extra-long staple cotton. During the cotton season 2019-20 (October-September), India’s production surged by 8.18 per cent over what was recorded in the previous season. Recently, Cotton Association of India (CAI), in its December estimates, has increased its cotton crop estimate for the 2020-21 season by 250,000 bales to 35.8 million bales of 170 kg each. The previous year’s estimate was 35.6 million bales.

Due to Covid-19, at $105 million, exports of cotton from the US to India during January-September 2020 have seen an almost 80 per cent reduction in shipments over the previous year. In CY2019, cotton exports to India from the US were valued at $587 million, the highest on record. In fact, during the year, cotton was the second highest exported agricultural commodity from the US to India, which is the fifth largest market for cotton exports after Vietnam, China, Turkey and Pakistan.

The February 2020 USDA forecast for world use in 2020-21 was 121 million bales -- up 1.7 per cent from the 2019-20 forecast made the same month. As the extent of the Covid-19 impacts became clearer, the 2020-21 world use forecast was slashed. However, as components of the world economy have recovered, use has edged up in recent months and is now only 3 per cent below February 2020. The forecast for world use in 2019-20 fell 14 per cent between the February and December forecasts as spinning mills dramatically reduced operations.

With global use forecast down and production largely unaffected, 2020-21 ending stocks are forecast higher at 97.5 million bales of 480 lb, which is 19 per cent (15.4 million bales) above the February 2020 Outlook. Prices, which had been trending up before the pandemic, retreated sharply from January to April, with the NY futures falling to a 10-year low. However, prices have rallied and now exceed pre-pandemic levels as mill use recovers and other factors support the recent strength.