In 2024, the main cotton-producing countries present a scenario of more rain in the east and drought in the west. There has been speculation about the weather in major U.S. cotton-producing areas such as Texas, but overall, the weak trend in ICE cotton futures prices still reflects expectations of increased production. Drought can only support cotton prices shortly. However, while paying attention to the abundant harvest of U.S. and Brazilian cotton, the cotton growth processes in the two major producers, India and Pakistan cannot be ignored. In particular, recent strong precipitation during the monsoon season may lead to significant price fluctuations in local cotton markets.
According to AGRICOOP, as of the week ending August 28, weekly rainfall in India's main cotton-producing regions was 131.3 mm, which was 88.2 mm higher than normal and 106.6 mm higher than the same period last year. From June 1, 2024, to now, the cumulative rainfall in these regions was 755.5 mm, which was 167.6 mm above the normal level. This means that since June, India's precipitation has been about 30% higher than normal. Meanwhile, neighboring Pakistan is also experiencing heavy monsoon rains. In August, the average rainfall reached 144 mm, with an average temperature of 34.1°C. The southern provinces of Sindh and Balochistan are the main rainfall areas.
Pakistan's cotton crops are in the flowering stage, so excessive rainfall will negatively impact cotton growth. Additionally, prolonged high temperatures will also significantly reduce crop yields. According to media, rainfall in Hyderabad district exceeded 100 mm within just three days, causing urban flooding and crop lodging, resulting in casualties and house collapses. Meteorological departments report that strong monsoon winds will affect the country until the end of August. Besides the direct impact of flooding on cotton fields, the hot and humid weather conditions can lead to pest infestations, which is another major issue following extensive rainfall. According to reports from the Indian Meteorological Department and foreign media on the 29th, precipitation and hurricane weather have caused flooding in Gujarat, displacing thousands of people and severely damaging cotton and peanut harvests.
According to Cotton Association of India, India's cotton production for the 2023/24 season is expected to be 5.4 million tons, while the USDA estimates 5.7 million tons, which is 300,000 tons higher. The USDA's estimate for India's cotton production for the 2024/25 season is 5.33 million tons, a 6.5% decrease from the 2023/24 season. As of August 22, 2024/25 India's cotton planting area is 11.14 million hectares, which is 1.117 million hectares lower than the same period last year, representing a 9% decrease. With less than a month remaining until the end of cotton planting in India, a 9% decrease in planting area is almost certain. Therefore, based on this proportion and recent adverse weather conditions, it is reasonable to further adjust India's cotton production for the 2024/25 season to 5.1-5.2 million tons.
The USDA estimates Pakistan's cotton production for the 2024/25 season to be 1.31 million tons, a 10% decrease from the previous season. However, PCGA estimates are 6-6.5 million bales (1.02-1.105 million tons), which is lower than the USDA's estimate, but both estimates indicate a decline in Pakistan's cotton production for the 2024/25 season.
Due to the decrease in planting area and recent flood disasters, concerns about cotton supply in India and Pakistan have increased, leading to a growth in demand for foreign cotton or imported yarn. Although it is expected that the flood damage caused by hurricanes will subside in the coming weeks, there are still market concerns about post-disaster recovery and pest issues in cotton fields. Hope that local governments can effectively address the agricultural disaster issues.
Source: CCF Group