Singapore, September 14 (ANI): Fitch Solutions said on Tuesday it expects cotton production in India to fall by one per cent year-on-year to 28.3 million 480lb bales in 2021-22 (previously two per cent growth) due to lacklustre rainfall throughout July and August, the main planting times.
Rainfall in Gujarat -- the country's top producing state (accounting for around a third of the country's annual production -- is almost 30 per cent below its long-term average as of mid-September which has reduced the area available for planting and weighed on yields.
In addition, said Fitch, the recent outbreak of pink bollworm in Bhatinda and Mansa will probably also act as a drag on yields. Nevertheless, production should bounce back in 2022-23, providing that weather normalises and that the outbreak of pink bollworm is adequately contained.
"The ongoing Covid-19 wave is slowing down production and consumption of textile raw materials in the country."
However, domestic textile manufacturing production is likely to increase over the next few years as the government's recently announced a five-year Production-Linked Incentive (PLI) scheme to provide additional financial support to domestic textile manufacturers.
At a global level, Fitch revised up 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 said it sees global demand rebounding by 14.1 per cent y-o-y in 2021 compared with 12.7 per cent growth in its last update in June following the 13.3 per cent Covid-19-related drop in 2020.
Putting global supply and demand forecasts together, it now 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 longer term, said Fitch, Bangladesh and Vietnam will gain significant market share in cotton consumption as their textile sector expand significantly.
"India, Indonesia and Pakistan are likely to benefit from the shift in low-value manufacturing away from China which would boost their share in global apparel exports."
However, a lack of preferential trade access to the US and EU markets as well as higher labour costs will temper the pace of expansion. China's demand will continue to trend lower as authorities look to reduce apparel manufacturing operations and move up the value chain, said Fitch. (ANI)