According to feedback from several private cotton processing companies in Gujarat and Maharashtra, the quotations of Indian domestic cotton spot S-6, J34 and MCU5 have continued to consolidate at a high level after a brief correction in late August. Cotton farmers, cotton processing companies, cotton Traders are in a strong mood to support prices.
As entering July/August, India’s 2021/22 cotton market volume has been significantly reduced, resulting in periodic production shortages (CAI may continue to reduce India’s cotton production), coupled with the fact that CCI has very few cotton resources that can be rotated out for sale, and The first batch of cotton in northern India in 2022/23 will be on the market at a high price (the purchase price of seed cotton has doubled year-on-year). Therefore, the game between spin mills and cotton companies is still fierce. Ginning plants and cotton merchants are more bullish and bullish, and cotton prices There is relatively little room for profit and negotiation on actual orders.
A cotton dealer in Mumbai said that India’s domestic cotton prices and MCX futures prices have been in a dilemma recently.
On the one hand, the lowest purchase price of MSP and the continuous rainfall in central India’s cotton area have affected the output and cotton quality to a certain extent, triggering speculation. In addition, after the end of October 2022, it is unlikely that the Indian government will continue to cancel the additional tariffs on foreign cotton imports. , farmers’ seed cotton harvesting and delivery progress in 2022/23 will still be slow, and it is difficult for Indian cotton prices to fall significantly. Indian yarn mills may increase cotton imports in September/October or accelerate the purchase of blended yarns and chemical fiber yarns. Directional transformation.
On the other hand, India’s cotton planting area is expected to reach the government’s target in 2022, and the output is worth looking forward to. According to the latest official data from India, as of August 20, the cotton planting area in India reached 12.769 million hectares, a year-on-year increase of 3.36%; and the northern cotton area is expected to have 2022 The total output of the northern cotton region in 2023 may increase by 23.40% to 5.83 million bales.
In addition, since the second quarter, domestic cotton prices in India have been too high. In Europe and the United States and other countries, the tightening of currency due to inflation has triggered a “brake” on consumer demand for cotton textiles and apparel. The number of new orders has declined significantly, and the Indian rupee has depreciated sharply against the US dollar. Factors such as The operating rate of factories and weaving enterprises has generally dropped to 40-60%, and cotton consumption has shrunk significantly. Some Indian cotton-related companies and institutions even believe that India’s total cotton consumption in 2021/22 may not exceed 5 million tons, which is 400,000-500,000 tons lower than the latest USDA report. Under the premise that the upstream cotton industry is generally bullish, while downstream consumption is obviously weak and output is expected to grow, Indian cotton prices briefly entered a sideways state of “cannot rise, cannot fall”.
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