By mid-2023, according to the president of the Cotton Association of India (CAI), cotton prices could reach Rs 75,000 per candy. This is because there is a significant gap between the crop’s current-season production and the high demand from both domestic and foreign markets. India will soon cease to be a net exporter of cotton and instead become an importer, according to Atul Ganatra, President of the Cotton Association of India. This is due to the country’s poor cotton production and high consumption. At the moment, cotton costs between Rs 62,500 and Rs 63,000 per confection in India.
The arrivals of cotton will begin to decline after May, though, and prices will gradually rise as a result. In June and July, cotton prices in India, according to Ganatra, could reach Rs 70,000–75,000. Indian mills are seeing strong demand for cotton due to rising cotton consumption, despite the fact that global cotton prices are trading at a four-month low as a result of sluggish demand. The decline in cotton exports this year is also a factor in the increase in cotton prices. However, up until March, India was still able to export 1.2 million bales of cotton. The outlook for cotton prices globally for the forthcoming crop year of 2023–2024 is uncertain due to variables affecting both supply and demand.
Due to high input prices and competition from other crops, fewer acres are predicted to be planted. However, weather patterns and growing conditions can have a big impact on productivity, thus this may not necessarily translate to fewer acres produced. Any weather pattern changes must be timed carefully, especially in West Texas where the climate is still quite dry. On the demand side, there is uncertainty since the predicted medium-term slowdown in global GDP development could result in a continuation of the fall in cotton consumption.
However, consistent expenditure and fewer imports of clothing can result in a reduction in inventory and a potential increase in demand. An uncertain macroeconomic outlook may moderate the effects of inventory modifications. The full set of USDA predictions for the upcoming crop year will provide more light on the trajectory of cotton prices. In the interim, the A Index level close to $1 and NY/ICE futures above 80 cents/lb would generally be linked with excellent returns for cotton, but it is challenging to forecast where prices will go due to the ambiguous supply and demand dynamics.
