Recently, the market focus has focused on the out-of-control epidemic in India. Originally, with the increase in the number of vaccinations, the epidemic in major countries around the world was becoming controllable. However, the powder keg of India was still unable to contain the speed and power of the outbreak. The world was shocked, but the even worse news is that the number of infections in India is far from reaching its peak. In the next few weeks, the number of confirmed cases of COVID-19 will increase significantly. What impact will this have on my country’s cotton market?
The number of infections continues to increase and the epidemic continues to worsen
Recent single day in India The number of new confirmed cases of COVID-19 has reached new highs. Data released by the Indian Ministry of Health on the 27th showed that the country had 323,144 new confirmed cases of COVID-19 compared with the previous day, and has had more than 300,000 new cases in a single day for 6 consecutive days. Currently, the number of new virus infections in India alone exceeds that of all European countries combined. Therefore, within a period of time, the epidemic in India will only get worse, and the impact on the global supply chain will continue. Once hundreds of millions of people become a hotbed for the virus, the mutation and adaptability of the virus will be greatly improved, which will pose a huge challenge to the existing protective capabilities of vaccines.
At the critical period of spring sowing, pay attention to the progress of new cotton sowing
As we all know, India is now the world’s largest cotton producer and the third largest cotton producer. The second largest textile producing country, the Indian flag has the symbol of a spinning wheel printed on it, which shows that the cotton textile industry plays a very important role in the Indian country. Since ancient times, India has been the country with the longest history of cotton cultivation in the world and the country with the largest cotton planting area. Indian cotton-producing areas are divided into three cotton-growing belts: northern, central and southern cotton belts based on production areas and climatic conditions. The area ratios of the three cotton belts are 20%, 60% and 20% respectively. Among them, the northern production areas are mainly artificially irrigated, with the sowing period from April to May and the picking period from October to December; the central and southern production areas are mainly rain-fed irrigation, with the sowing period from May to July and the picking period from November to February. At present, India is gradually entering the spring sowing period of cotton.
China’s cotton market monthly report shows that India’s new cotton sowing work has begun in northern India. There are different opinions in the market about the cotton planting area in India. The United States Department of Agriculture predicts that India’s cotton planting area is expected to decrease by about 2% year-on-year in 2021/22; the U.S. Agricultural Counselor predicts that India’s cotton production in 2021/22 will increase by 2.7% year-on-year.
Due to the epidemic in Xinjiang last year, the planting, picking, selling, and transportation of new cotton in my country were temporarily affected. The severe epidemic areas in India are now spread across the major cotton-growing provinces. The extent of the impact still requires continued attention. After all, it is still in the early stages of spring sowing. If it is confirmed that the epidemic is out of control and affects the spring sowing area of cotton, it will play a strong supporting role in international cotton prices.
The Indian textile industry is large-scale and highly competitive
According to the April report of the US USDA It is predicted that in 2020/21, India’s cotton consumption will reach 5.291 million tons, making it the second largest consumer in the world. India’s yarn production capacity currently accounts for 22% of the world’s. The textile and apparel industry is one of the leading industries in the Indian economy and one of India’s largest sources of foreign exchange earnings. India’s official data website shows that the textile industry’s annual revenue accounts for about 15% of India’s total export revenue.
In recent years, India’s handmade textile industry has been in a leading position in the world, and the scale of India’s textile industry has reached 890 billion yuan. As the world’s largest cotton yarn exporter, India has strong international competitiveness due to its cost-effectiveness advantage.
No matter in terms of cotton yarn count, product grade and supply stability, there is still a big gap between yarn companies in Pakistan, Indonesia, Vietnam and other countries and India, and India’s All aspects of cotton yarn, weaving, printing and dyeing, and clothing are relatively mature, and the industrial supporting facilities are relatively complete. If the epidemic affects the production capacity of Indian companies, it will bring benefits to the textile and clothing industries of other countries, especially China’s textile and clothing industry. At present, Indian textile and clothing companies are still producing, and the specific impact has not yet been fully revealed.
As the epidemic intensifies, is the transfer of orders a reality or a dream?
Since last year, my country’s textile industry has grown against the trend. A large part of the reason is that my country has the best control of the epidemic in the world, the textile industry can produce safely and stably, and foreign order customers can only choose China. Downstream textile companies said that since the second half of last year, cotton yarn orders have been very good. In order to get orders as early as possible, some customers even paid advance payments one month in advance, just to ensure timely supply. What are the differences between this situation and last year? Will the return of orders still happen?
At present, except for Yunnan, there have been no local confirmed cases in all parts of China for more than two consecutive months. The epidemic battle has achieved a phased victory. As China continues to rapidly promote large-scale vaccination, the current epidemic prevention and control situation is much better than last year, and the production and marketing environment of domestic textile enterprises has been further consolidated and strengthened.�
Looking at the situation abroad, the epidemic prevention and control situation in the world’s major textile production countries such as India, Pakistan, and Bangladesh has even continued to deteriorate, especially in India. serious. The intensification of the epidemic will cause companies to suspend production and limit production. In addition, due to the strong contagiousness and adhesion of the virus, foreign customers will inevitably shift orders due to order safety and delivery timeliness.
Another important point is that with the increase in the number of people vaccinated, although the epidemic in European and American countries is still in a severe period, there has been a big improvement compared to last year, and the turning point of the epidemic has also reached It has already appeared, and the consumption potential is gradually emerging. Last year, major consuming countries were still mired in the quagmire of the epidemic and were unable to extricate themselves. Now the blockade and isolation measures are being relaxed, and the economy is showing signs of recovery.
In early April, the International Monetary Fund (IMF) released the latest “World Economic Outlook Report”, predicting that global GDP growth in 2021 and 2022 will be 6% and 4.4% respectively. %, respectively 0.5 percentage points and 0.2 percentage points higher than the IMF’s forecast at the beginning of this year. The rapid advancement of vaccination worldwide is the main reason why the IMF has raised its global GDP growth forecast this time.
The continued recovery of consumption may push up cotton prices
The recovery of consumption includes two levels. One is that the global economy has recovered, and people’s consumption of textiles and clothing has increased; the other is that overseas orders have shifted, and orders from Chinese companies have increased. At present, the first level has been gradually realized. The second level has already occurred during the first wave of the epidemic last year, and is now in the second wave. According to the author’s prediction, it is likely to occur as well. Since last week, the price of some domestic yarn varieties has increased by 200-300 yuan/ton, and many companies have no inventory or negative inventory of finished products.
One of the interviewed companies said that although it cannot yet be determined whether overseas orders have begun to be transferred, it is in the traditional production off-season and the yarn is in negative inventory. The situation of surrounding companies is similar. . Under the conditions of full-load production, enterprises’ demand for raw materials will gradually increase, which will have strong support for cotton prices.
Although the fundamentals of global cotton supply and demand remain balanced and there is no shortage of raw materials, it cannot be ruled out that during certain periods of strong demand, the center of gravity of my country’s cotton prices will fluctuate upward again. Judging from the renewed ferocity of this wave of epidemics, it is expected that the intensity of foreign order transfers may be higher than last year. Coupled with the global economic recovery, cotton prices should have a bright performance. </p
