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India may produce less cotton

India’s cotton production is expected to drop in the next season starting October 1 on account of deficient rains. Lower output may drive up domestic cotton prices in 2015-16 and further dent exports, as local prices are already ruling above global levels. India’s output could touch 37.7 million bales for 2015-16 compared with 38.3 million bales in the current marketing year.

The cotton crop has been affected by deficient rains, which dropped 14 per cent from the benchmark long-period average so far this year. While Gujarat and Karnataka could witness smaller harvests in 2015-16 than a year before, drought-hit Maharashtra is projected to have a bigger harvest next year than in 2014-15.

While cotton imports are projected to remain unchanged, exports are expected to suffer in view of a slowdown in its largest buyer, China. China, which usually accounts for over 70 per cent of India’s cotton exports, has cut down on purchases in a bog way. Even the depreciation of the rupee against the dollar isn’t going to help Indian textile exporters much, as the recent yuan devaluation by China has made its imports more expensive. Cotton consumption within India is forecast to rise 3.2 per cent from a year earlier.