'Adverse global conditions present a challenge for textile demand'

Cotton Council International executives say zero tariff regime should continue as it is beneficial to mills

The Indian cotton markets saw wild fluctuations in prices this year (October 2021 to September 2022) because of low supplies and global trends. In an interview, William Bettendorf, director of the Cotton Council International, and Peush Narang, the council’s India representative, said prolonged lockdowns in China, rising inflation in the US and the UK present a challenge to clothing demand, which is considered discretionary expenditure. Edited excerpts:

What is your forecast for Indian cotton production this year?

According to the latest United States Department of Agriculture report, India’s forecast for cotton production shows an upward trend with around 27.5 million bales (each bale size 480 lbs or pounds) in the year 2022-23.

Do you think it will be significantly higher than last year or less than last year?

It is higher than last year. Last year there were 24.5 million bales.

In the past few years, the global cotton markets have passed through a difficult phase with tight supplies. Do you think the situation will continue this year too?

This year, global production is up by 1.4 million bales at 118.4 million bales and global consumption is projected at 118.6 million bales, with lower projected use in a few countries, so we expect the supply situation to be relatively better, with the exception of the US, where the cotton crop output is expected to be lower this year.

What is your demand and supply balance sheet for cotton 2022-23 (August to July) globally and in India (October to September)?

Production in the US is estimated at 13.8 million bales, exports at 12.6 million bales, and domestic use at 2.3 million bales, resulting in an ending stock of 2.7 million bales.

In India, production is estimated at 27.5 million bales, domestic use of 25 million bales, imports of 1.5 million bales, and exports of 3.7 million bales, resulting in an ending stock of 8.9 million bales.

Where do you see Indian cotton prices heading next season in rupees per bales? Also what is the outlook for global cotton prices in 2022-23?

With so many variable macroeconomic factors and volatility, it is extremely difficult to predict Indian and global cotton prices. We are looking at concerns from both the demand and supply sides.

The situation in the major textile consuming nations – China where there have been prolonged lockdowns, Europe which is staring at the exorbitant rise in energy costs, and the US and the UK which are witnessing unprecedented inflationary pressures – presents a challenge for clothing demand, which is considered discretionary spending.

Indian cotton has become increasingly vulnerable to pests and diseases. What is your remedy for this? How should the industry and government move forward?

This has been an issue that has been hurting the Indian cotton industry for a while. It would need a collaborative approach to address this problem. In the US, the advancement in technological know-how has enabled us to address this issue.

Do you think China will continue to buy cotton in large volumes as it has been doing in the past few years?

We need to see how China reacts after the US-China trade deal Phase 1. With less domestic consumption because of the lockdown in many parts of China, it has good cotton stock this year. But with the Xingjian cotton/Uyghur labour Act in the US, China has to import cotton for export orders.

Do you think; India will need to import cotton this year? If yes, how much would it need to import? Also, should the zero tariff regime for imports continue for a few more months?

There is always demand for imports in India for specialty and high value products like extra-long staple cotton and clean cotton. The zero tariff regime should continue as this is beneficial to the mills as they have easy access to good raw material.