India, the world’s biggest cotton producer, is likely to export 6.8 million bales in the 2015-16 season, up 18 per cent from a year ago as demand from Asia is expected to improve. Higher exports will cap global prices but raise domestic prices and help bring down government purchases at the support price. India is expecting higher demand from Bangladesh, Pakistan and Vietnam. This will offset poor demand from China.

In 2014-15 season, Bangladesh surpassed China to become India’s top buyer of the fiber as the world’s biggest consumer began cutting import quotas to stimulate demand for domestic cotton after it halted a state stockpiling program. China has in recent years taken more than half of cotton exports, propping up prices despite a record output. In 2014-15 exports dropped 51 per cent from a year ago after China halved imports.

In 2015 India suffered its first back-to-back droughts in three decades, hitting yields of summer-sown crops like cotton, rice and soybeans. Higher exports amid a drop in production would bring down closing stocks for the 2015-16 season to 3.8 million bales, down 27 per cent from a year ago. Cotton consumption in the new season is expected to edge up 1.7 per cent to 32.3 million bales.