InvestorQ : What drives demand and supply for cotton?
Neha Samdani made post

What drives demand and supply for cotton?

sarah Leo answered.
3 years ago

Cotton is normally measured in bales and each bale is defined based on its staple, grade and character. While staple refers to the length of the fibre, the grade refers to whether the cotton is coarse or premium. Character is a measure of the fibre’s strength and absorbency. For the fiscal year 2015-16 cotton production was flat at 26.1 million metric tonnes (MMT). India and China are the world’s two largest cotton producers and account for nearly 50% of the global cotton production. The US and Pakistan put together account for another 20% of global output. China and India also happen to be the 2 largest consumers of cotton accounting for 58% of the global demand. Pakistan, Turkey, Bangladesh, Indonesia and the US are among the other major consumers of cotton.

The annual global trade of cotton is estimated at around 7 MMT, with the US being the largest exporter of raw cotton and China being the largest importer. India is the second largest exporter of cotton after the US. In India cotton is sown between March and September and harvested between October and April. However, India’s average cotton acreage is just about 60% of the global average. In India cotton is essentially produced in the states of Gujarat, Maharashtra, Andhra Pradesh and Telangana. India currently exports around 7 million bales of cotton each year (where each bale is equivalent to 170 KG). Cotton prices are largely determined by production seasonality, pest attacks, government policy etc.