Lacklustre rainfall throughout July and August will lead to one per cent year-on-decline in India’s cotton production to 28.3 million 480lb bales in 2021-22, predicts analyst Fitch Solutions. The recent outbreak of pink bollworm in Bhatinda and Mansa will also drag down yields, says a Fitch Solutions report. However, the analyst expects production to bounce back in 2022-23, if weather normalizes and the outbreak of pink bollworm is adequately contained.
At a global level, Fitch revised its 2021 average cotton price forecast to USc90.0/lb (USc87.0/lb previously). The near-term supply outlook has worsened, it said, Meanwhile, Fitch said global demand will rise strongly in 2021, and subsequently revised up its demand forecasts in Bangladesh and Turkey. The recovery in these two countries has been somewhat better than originally anticipated. Fitch sees global demand rebounding 14.1 per cent y-o-y in 2021 compared to 12.7 per cent growth in its last update in June following the 13.3 per cent COVID-19-related drop in 2020.
The analyst estimates the deficit to be 4.4mn 480lb bales this year compared to a previous estimate of 1.8 million bales. This will put downward pressure on global stocks and provide some support to the price. In the long term, Bangladesh and Vietnam will gain significant market share in cotton consumption as their textile sector expand significantly, says Fitch.
