In 2021/22, a series of factors such as delays in India’s new cotton harvest, rush to harvest by processing companies, the government’s 10% tariff on imported cotton, a blowout of orders for the cotton textile and apparel industry since the fourth quarter of 2021, and the depreciation of the rupee against the U.S. dollar have led to domestic cotton prices in India. Prices are “unlimited”, with S-6 spot, MCX futures and CCI round-out floor prices constantly hitting record highs. Unable to accept and digest high-priced Indian cotton, some southern yarn mills have increased inquiry and signed contracts to purchase US cotton and Brazilian cotton. Cotton and even West African cotton (the loading period is concentrated in the first and second quarters) to alleviate the pressure on spinning costs.
Due to the sharp increase in the transaction price of Indian seed cotton in 2021/22, farmers’ income is significantly higher than that of peanuts, soybeans and other crops; coupled with the prominent “supporting” effect of the MSP minimum purchase protection price being raised again, and the epidemic’s impact on production and material circulation And the impact of personnel movement continues to weaken. Therefore, it has become the consensus of some institutions and cotton-related companies that India’s cotton planting area will increase year-on-year in 2022.
However, the Indian Cotton Association recently released a report, predicting that the cotton planting area in all 10 major cotton-producing states in India will expand by 20-25% in 2022/23. Such a significant year-on-year increase in cotton planting area is somewhat unexpected.
The author believes that CAI’s planting intention investigation report is suspected of setting off a “smoke bomb” for the following reasons:
First, although the prices of seed cotton and lint cotton in Gujarat, the main cotton-producing region of India, have hit record highs, the yield per unit area has declined significantly year-on-year due to various reasons such as weather, cotton varieties, and management levels. Farmers’ net income per mu is lower than that of other food and economic sectors. The crop advantage is not outstanding, and farmers have no strong intention to expand cotton planting area in 2022.
Second, one of the key factors for the increase or decrease of cotton planting area in India is when the southwest monsoon arrives, the amount of rainfall and when to evacuate, because compared with the northern cotton area, which is mainly artificial irrigation, the cotton sowing time and planting time in the central and southern cotton areas are different. The area depends on the weather, so the results of the current survey intention are not of much significance for reference.
Third, affected by the sharp rise in energy, chemical industry, transportation and other costs, India’s domestic fertilizer, pesticide and other prices will continue to rise in 2022. Coupled with the tight supply of BT cotton seeds (the pink bollworm outbreak in 2021 will lead to lower yields in some cotton areas in India Restricted by factors such as a large decline) and the uncertainty of the epidemic, it is questionable whether farmers can significantly expand cotton planting.
</p
