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India's Cotton Harvest Weakness Spurs Price Surge, Import Threat

International cotton prices are poised to increase further as India, the world's second-largest cotton grower, faces predictions of a weak harvest, potentially turning the country into a net importer. New York cotton futures closed at 84.79 cents a pound, experiencing a 7% surge since the end of April.

India's cotton export forecast for the 2022-23 year has been downgraded by the U.S. Department of Agriculture (USDA), with a 22% decrease compared to the previous estimate. Poor weather conditions in Telangana, Maharashtra, and other states have impacted India's cotton harvest, leading to a production forecast downgrade by the Cotton Association of India.

Experts anticipate that India will increase cotton imports, partly due to a tariff-cutting agreement with Australia. The USDA predicts a 75% rise in cotton imports for India in 2022-23. This shift in India's export status may strain global supply and demand, potentially driving up prices. With reduced exports from India, other cotton-producing countries will face increased demand.

Furthermore, the USDA projects a 14% decline in cotton exports by the United States, the world's largest cotton exporter, and an 11% decrease in exports from Brazil. This limited capacity to compensate for falling Indian exports coincides with growing global cotton demand, driven by economic recovery, particularly in Asia.

Overall, the combination of reduced Indian exports and rising global demand creates a tight supply situation, with potential implications for international cotton prices.

 

 
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