Cotton Production And Price Rise India Cotton Yarn Enterprises Are Injured

The shortage of water in farmland and the lack of southwest monsoon rainfall in the main cotton producing areas, together with the frequent occurrence of pests, will lead to a decline of more than 5% cotton production in India in 2018/19.

In the 2020 fiscal year, the operating profit of India cotton yarn mill was shrinking by 100-150 basis points, mainly due to the decline in cotton production, the rise in cotton prices and the inconstant demand.

This will reverse the recovery of the previous fiscal year.

Affected by the reduction of cotton production, the end of India cotton inventory will fall to two years low in the year of 2018/19, which will boost domestic cotton prices to 128-140 rupees per kilogram in the current fiscal year, up by 7-8% over the previous fiscal year.

At the same time, global cotton prices are expected to stabilize at 128-134 rupees per kilogram, due to increased production in China and Brazil, offset the decline in output in India, the United States and Australia.

India's largest credit rating and research firm CRISIL said on Tuesday that it would narrow the cotton price gap between India's domestic and international markets.

CRISIL forecasts that the overall demand for cotton yarn in fiscal year 2020 will grow at a slower rate of 4.5%, much slower than the 5.6% growth in the previous fiscal year.

"This is not good news for India textile mills."

CRISIL said that the rising cost of cotton and a mild demand outlook mean that cotton yarn prices can not rise correspondingly, which will reduce the operating profit in the current fiscal year by 100-150 basis points.