USDA – India Cotton Products latest update

Report Highlights

Post estimates cotton production at 29.3 million 480-lb. bales in marketing year (MY) 2020/21 on an area of 13 million hectares. There are increasing reports of pest infestation across various states, but most are localised incidences. Fiber prices have improved due to a sharp rise in government procurement, coupled with rising exports of raw cotton and cotton products. Mill consumption remains constrained at 22.8 million 480-lb. bales as fears of additional lockdown measures continue to affect consumer sentiment.

Area and Production

Post estimates India’s cotton production at 29.3 million 480-lb. bales (37.5 million 170-kilogram bales/6.4 million metric tons) for marketing year (MY) 2020/21 on an area of 13 million hectares. Post’s area estimate is 400,000 hectares lower than the official USDA estimate. According to the First Advance Estimates for 2020-21 published by the Ministry of Agriculture and Farmers Welfare’s (MOAFW), Kharif cotton area is estimated at 12.957 million hectares compared to 2019/20 fourth advance estimates of 13.369 million hectares. Post’s production estimates are 700,000 480 lb. bales lower than official USDA estimate, however the estimated yields are marginally higher due to lesser impact of widespread rains on crops across major cotton growing districts. Harvesting is underway across all cotton regions, with incidences of pink bollworm and boll rot reported from certain districts in Andhra Pradesh due to heavy rains. In Gujarat and Telangana, there are also reports of pink bollworm infestation, and farmers have been advised to detach the infected flower from the cotton plant, and destroy it along with the caterpillar prior to spraying insecticides and installing pheromone traps.

Government Procurement Continues at a Brisk Pace

The Cotton Corporation of India (CCI) has been procuring supplies under the minimum support price (MSP) program for Indian marketing year (Oct/Sep) 2020/21. Procurement operations of seed cotton (kapas) under MSP are actively underway in the states of Punjab, Haryana, Rajasthan Madhya Pradesh, Maharashtra, Gujarat, Telangana, Andhra Pradesh, Odisha, and Karnataka. Pradesh, Maharashtra, Gujarat, Telangana, Andhra Pradesh, Odisha, and Karnataka. According to a recent press release by the Ministry of Agriculture & Farmers Welfare, cotton procurement as of November 23, 2020, has reached 1.77 million 480-lb. bales (2.26 million 170-kilogram bales/384,000 MT), valued at USD 917 million (INR 6,783 crore) benefitting 453560 farmers.

Arrivals and Stocks

According to CCI, new crop arrivals as of November 24 are around 5 million 480-lb. bales (6.5 million 170-kilogram bales/ 1.1 MMT), which is the highest arrival level in the past five years. Farm gate seed cotton prices have risen by 19 %  since the beginning of the Indian marketing year (Oct/Sep), and seven %  from previous month, however, prices still remain below the MSP rates, prompting farmers to prefer selling to government agencies, instead of private traders. As of November 25, trade sources indicate that unsold stock from MY 2019/20 remaining with government agencies is around 2.7 million 480 lb. bales (3.5 million 170-kilogram bales/595,000 MT). Cumulatively, unsold stocks held by government agencies and private traders is estimated at 12.5 million 480 lb. bales (16 million 170- kilogram bales/2.7 MMT).


Post estimates MY 2020/21 cotton consumption at 22.8 million 480-lb bales (29.2 million 170-kilogram bales/5 MMT). This estimate is 200,000 480 lb. bales lower than the official USDA estimate. Due to a gradual easing of the lockdown, mill operations have resumed and orders starting to flow in, however the industry has not reached pre-COVID demand levels. Export orders also are cautious and demurred. As a result, cash flow is still stressed across the supply chain and producers are operating hand-to- mouth. Trade sources indicate that small to medium sized mills are carrying 45 days of inventory, covering them until the end of December. Larger mills are covered for about 65 days, as such, the mill buying rate has slowed down. The reduction in overall =demand continues to intensify the global competition. While this pent-up demand has improved yarn rates and margins in the short term, the medium-term (1-3 years) growth will likely be driven by higher demand in the blended yarn/fabric industry, specifically for medical apparel and personal protective equipment (PPE).

As for domestic consumption, retail apparel demand remains subdued due to a rising number of COVID-19 cases. The reopening of retail markets over the past two months in addition to the local holiday season, and the onset of weddings and winter in Northern India have led to a surge in demand. However, rising COVID-19 cases and the expected reinstatement of lockdown measures will limit consumer footfall, slowing down demand recovery.

For the month of September 2020, the quick estimates of the Index of Industrial Production (IIP), indicate that the textile manufacturing sector witnessed 12 %  negative growth in production volume compared to September 2019, highlighting ongoing contraction due to COVID-19.

Cumulatively, Indian fiscal year 2020/21 (Apr/Sep) witnessed a 41 %  decline as compared to 2019/20. However, it should be noted that the monthly index of textile production has been rising steadily since April onwards and has surpassed the base index value indicating positive growth. For more details please refer to Quick Estimates of IIP September 2020.


Post estimates MY 2020/21 exports at 4.7 million 480-lb. bales (6 million 170-kilogram bales/1 MMT). Post’s estimate is almost 300,000 480-lb. bales lower than the official USDA estimate. While raw cotton shipments seem to be increasing, the pace of recovery is slow and uncertain due to growing concerns about a resurgence of the COVID-19 cases in export markets. Since October, Indian ex-gin prices have risen by nine % , aligned with Cotlook A-Index which increased by ten %  simultaneously.

The prospect of lower supplies of higher quality cotton, and rising demand has led to a surge in fiber prices. Nevertheless, Indian cotton still remains one of the least expensive in the world. According to

FAS analysis, raw cotton shipments in October were 18 %  higher than the previous month. Bangladesh, China, and Vietnam were the top export destinations.

Indian cotton yarn prices have also risen by twelve %  since October, driven by higher yarn demand mostly from Bangladesh, China, Peru and Portugal. Preliminary trade estimates published by the Ministry of Commerce indicate that cotton yarn shipments (by volume) in October were five %  lower than the previous month, however the shipments were 12 %  higher on a year over year basis. Cumulatively, in MY 2020/21 between August to October, cotton yarn shipments are 29 %  higher than same period last year.

Provisional trade estimates published by the Ministry of Commerce indicate that exports of cotton yarn/fabrics/made-ups and] handloom products were 7 %  higher (by value) in October 2020 as compared to the same period last year. However, the cumulative value of exports between April- October is lower by 16 % , compared to same period last year. Similarly, exports of readymade garments of all textiles are higher by 6 %  in October compared to the same month last year, however the cumulative value of exports from April – October fell by 34 %  compared to the same period last year. The impact of COVID-19 ] has not spared exports of man-made yarn/fabrics/made- ups, as they are down by 13 %  in October compared to the same month last year, and 35 %  from April-October 2020.

Despite a slow recovery of trade flows, there are other challenges disrupting the supply chain. As international trade flow between different world regions was disrupted, the availability of empty containers at different locations and vessel space became limited. Consequently, there has been a significant increase in freight rates, making exports and imports of raw material costly and challenging. In addition, there are other issues such as labor shortages, an uncertain demand outlook, and limited liquidly affecting trade. Also, due to exchange rate volatility, exporters are facing difficulties in finalizing export orders.

Post estimates MY 2020/21 imports at 1 million 480-lb. bales (1.28 million 170-kilogram bales/218,000 MT). Post analysis indicates that October imports declined by more than 40 %  from previous month. In October, top cotton suppliers were the United States, Egypt, and West African countries.

Post analysis indicates that almost 68 %  of total imports were shipped to ports in Southern India. This decline in shipments can be attributed to the availability of large volumes of domestic crop along with rising volatility in India’s currency.