Now Reading: USDA cuts India cotton output forecast to 24.5 mn bales
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USDA cuts India cotton output forecast to 24.5 mn bales
India's 2026/27 cotton production is forecast at 24.5 million 480-lb bales, a 2% drop in yields, due to below-normal monsoon rainfall, the US Department of Agriculture's Foreign Agricultural Service said. Planting is…
India's 2026/27 cotton production is forecast at 24.5 million 480-lb bales, a 2% drop in yields, due to below-normal monsoon rainfall, the US Department of Agriculture's Foreign Agricultural Service said. Planting is 2% behind last year and reservoir storage stands at 60% of capacity, with western and central India at risk of extended dry spells through September.
Despite lower output, domestic mill use is raised to 26.2 million bales, driven by rising textile and apparel export orders. Higher minimum support prices and tighter supplies are expected to keep lint prices firm, pushing mills to bridge shortages via higher imports under duty-free mechanisms if the general tariff exemption expires after October 31. Raw cotton exportable surplus will remain constrained as fiber is diverted to downstream manufacturing.
Indian Opinion Analysis
The USDA's forecast highlights a structural shift: India, once the world's top cotton exporter, is becoming a net importer as domestic consumption outpaces production. Textile export orders under production-linked incentive schemes are boosting mill demand, while monsoon variability and low reservoir levels threaten kharif yields. The key variable is the tariff exemption expiry on October 31: if it lapses, imports become costlier, squeezing margins for mills that already face high minimum support prices. The government will need to decide whether to extend the exemption to stabilise raw material costs for the textile sector.
The government must decide by October 31 whether to extend the duty-free import exemption to keep mills supplied. The next monsoon update, due in mid-September, will be critical for final yield estimates.
Source: thehindubusinessline.com
This brief was synthesised by AI from the source linked above.
