In late August, cotton planting in India for the 2021/22 season is coming to an end. According to CCI forecasts, India’s cotton planting area will drop from 13.3 million hectares last year to 12.5 million hectares this year, a decrease of 6-8%. This is mainly due to the slow northward movement of the southwest monsoon and the sharp increase in the price of chemical fertilizers and other agricultural inputs, which has led to the cost of cotton cultivation. Increase, competition from other crops and epidemic prevention and control (Maharashtra, Madhya Pradesh, etc. have experienced larger decreases). However, due to good rainfall, cotton production may remain high, reaching 35-36 million bales (approximately 5.95-6.12 million tons). USDA’s latest monthly report shows that India’s cotton production in 2021/22 reached 6.314 million tons, significantly higher than the CCI forecast.
Several private cotton companies in Gujarat, Punjab and other places have judged that the decrease in cotton planting area in India in 2021/22 will not exceed 5%, and the actual sown area may be 12.8-13 million hectares, higher than the 12.5-12.67 million hectares predicted by CCI and CAI; however, private cotton companies are generally skeptical about the significant increase in cotton yield in India in 2021/22. On the one hand, the prices of agricultural inputs have increased significantly. And the epidemic has affected incomes, and farmers have reduced their investment in cotton planting; on the other hand, affected by weather changes and the decline in the proportion of BT cotton planting, some cotton areas in India have been attacked by insect pests and cotton plant withering since August, such as insect pests in Maharashtra , Mansa district is affected by moths, Vidarbha pink bollworm attack etc.
Regarding the CCI acquisition situation in 2021/22, some Indian cotton companies and export companies believe that CCI is likely to “not collect any grains” (CCI predicts that the acquisition volume will be less than 3 million bales) , the reasons are as follows: First, the MSP of medium-fiber length cotton in 2021/22 is 5,726 rupees/quintal, which is only an increase of 211 rupees, or 3.8%, from the previous year, which is significantly lower than the current seed cotton purchase price and farmers’ expectations; second, The Indian government will continue to impose an additional 10% tariff on imported cotton in 2021/22, resulting in a significant decline in the competitiveness of imported cotton. Indian cotton textile mills have a very narrow choice space; thirdly, in the post-epidemic era, the Indian cotton textile and apparel industry has recovered rapidly, and continues to Orders/orders/deliveries have rebounded strongly, cotton consumption is worth looking forward to, and Indian cotton prices may “open higher and move higher” in 2021/22. </p
