India’s Falling Rupee Presents Cotton Industry Unique Challenges

NEW DELHI, INDIA – India’s cotton industry is banking on a big year after increasing acreage by 3 percent in 2020. Under current conditions, the U.S. Foreign Agriculture Service expects cotton production there to be almost 29 million bales. This could pose resistance for higher prices as the Indian government has been unable to offload stocks of cotton at a rapid pace, due in part to the COVID-19 global shutdown and a corresponding loss of demand. FAS reports exports of cotton and cotton products are improving as mill operations return to normalcy. Adding to India’s problems however is a 9 percent decrease in currency (the rupee) over the past 12 months, which makes imports very expensive. Since many of the mills prefer higher grades of cotton, primarily from Mali, the United States, and Mexico, the industry may face the challenge of using lower grades of domestic cotton in an effort to remain profitable.
(SOURCE: All Ag News)