Export demand for cotton to remain sluggish as China, the top destination for Indian cotton, remaining inactive in importing the commodity, exports are unlikely to see significant growth this year. Due to the sudden spurt in export demand for cotton as helped firm up cotton prices in recent times, according to Indian Cotton Federation (ICF) .

Prices of the benchmark Shankar 6 variety has jumped three per cent to Rs 9,617 a quintal from Rs 9,336 nearly two-three weeks ago, cotton futures for near-month delivery saw 1.3 percent gain at Rs 9,665 a quintal on the Multi-Commodity Exchange. The market hopes for even higher demand in the days ahead.

The latest cotton report released by the US department of agriculture (USDA) suggests India’s cotton output is expected to decline for the second consecutive year to 37.5 million bales in the marketing year 2015-16 mainly due to a likely drop in yields on account of delayed sowing, weather issues and low realizations.

For the 2014-15 marketing season (August-July), USDA has forecast cotton output to be 38 million bales, while the government has projected it at 35.3 million bales (one bale equals 170 kg of cotton).

The Cotton Advisory Board, on its part, said that the country’s total production during 2013-14 stood at 39 million bales and ICF estimates the production for 2014-15 at around 38.7 million bales.

These numbers need to be seen in the light of the recently-released report of the International Cotton Advisory Committee (ICAC), which said the world’s cotton area is expected to decline by 6 per cent to 31.3 million hectares in 2015-16 due largely to lower prices in 2014-15. In India, the cotton area is projected to decrease by 5 per cent to 11.6 million hectares in 2015-16, the report said, adding that, falling prices for competing crops and a modest increase in the MSP may forestall a greater decline.

India exported 90 lakh bales of cotton in 2013-14. Exports are likely to end up at nearly 45 lakh bales this year with 35-37 lakh bales already exported as of June 30.

India is losing its market share in cotton and man-made fibre (MMF) categories, as most of the products are made of coarse cotton yarn and MMF prices are at least 25 percent higher than the rates prevailing in the competing countries, according to textile industry sources.

Cotton is predominantly a monsoon or kharif season crop planted from the end of April through September and harvested during the winter. India accounts for about one-third of the global cotton area. Two-thirds of India’s cotton is produced in states like Odisha, Maharashtra, Madhya Pradesh and Gujarat, where much of the crop is rain-fed. North India, comprising Punjab, Haryana and Rajasthan, produces cotton under irrigated conditions and accounts for 15 percent of total production. Andhra, Karnataka and Tamil Nadu contribute 30 percent down south.