Any decline in cotton production among the world’s top cotton producers could squeeze margins for apparel makers worldwide and push up clothing prices. Higher prices also could affect cotton seeds, which are used in animal feed and edible oil.
After a slow seasonal start, China, the world’s largest importer of cotton and the biggest apparel manufacturer, during the last six weeks has purchased 1.9 million bales of cotton from the US, representing the strongest weekly sales in cotton in over a decade. Although China's total commitments are down from a year ago, its current accumulated plus outstanding sales for the 2021/22 season are its second highest on record.
China’s buying spree coincided with heightened concerns about the quantity and quality of India’s cotton crop, but the recent late-season rains that look set to continue in Texas and parts of Oklahoma and Arkansas during the region’s crucial harvest period appear to have pushed the market over the edge last week.
Monday’s US crop condition report will be telling, as it could show a slight decline in ratings linked to the recent rains. Rain soaks cotton in the fields and makes it difficult for farmers to harvest the crop efficiently and effectively. Even if production quantity doesn’t take a hit, the rains in and around Texas might impact crop quality and color grade. Wet cotton tends to have a lower color grade, causing the crop to lose much of its value.
In India, both the quality and quantity of cotton is at risk. The USDA’s forecast for 2021/22 Indian cotton production of 28.5 million (480 lb.) bales, little changed from last year, might prove to be too high.
India’s main cotton growing regions — Andhra Pradesh, Maharashtra, and Gujarat — all recently received heavy precipitation related to Cyclone Gulab. Notably, Gujarat received record high rainfall in September, sparking intense quality concerns there. That follows production concerns at the beginning of the season, when India’s monsoon delivered below-normal rainfall in key growing regions, as Gro wrote about here. India is the world's largest cotton producer and second-largest exporter, after the US.
Cotton is one of the most important crops in the world, and Gro’s forecasted rainfall models coupled with district level planted area allows for a much more granular view of the impact on a crop.