India's cotton imports to rise amidst low production

India is expected to increase its cotton imports during the 2024-25 crop year due to factors like lower carry-forward stocks from previous year and decline in sowing acreage. These factors are projected to reduce domestic cotton production. The shortfall is likely to be supplemented by imports, Cotton Association of India (CAI) estimates a total of 35 lakh bales, up from 16.40 lakh bales in the 2023-24 season.

The reasons for higher imports are many. First, cotton sowing has decreased by 12-13 lakh hectares compared to previous year, leading to lower overall production. There there is a negligible carry-forward stock of cotton from the 2023-24 season, further exacerbating the supply shortage. Also, traders are taking advantage of the prevailing low global cotton prices by contracting imports for November-March delivery.

To meet domestic demand, India is likely to import cotton from Brazil, Australia, and West Africa. The landed cost of these imports varies depending on the country of origin and the specific grade of cotton. However, the overall trend is towards increased imports to bridge the gap between domestic production and consumption.

While it is still too early to accurately predict the final size of the 2024-25 cotton crop, recent rains have caused damage in some regions, potentially further impacting production. The situation will continue to evolve as the growing season progresses.