According to feedback from several international cotton traders and importing companies, India’s domestic cotton prices and FOB/CNF quotations have fallen in unison in the past two days, and the correction is close to the expectations of cotton mills and cotton brokers; while S-6, J34, MCU5, etc. Due to the significant “inversion” between the spot quotation and the MCX futures price, MCX futures transactions have been relatively active since late February, with buyers receiving warehouse receipts to replenish raw material inventories.
A private cotton company in Gujarat stated that domestic cotton consumption demand in India has continued to be sluggish since February, and inquiries/signing contracts for Indian cotton from buyers in China, Vietnam, Bangladesh and other countries have also been low; coupled with the recent main ICE cotton futures contract It dropped from 125.83 cents/pound to 118.76 cents/pound. Some institutions and cotton-related companies have anticipated the short-term high cotton price correction and have taken hedging measures in a timely manner. The company reported that in mid-to-early February, Indian cotton spinning mills and cotton traders were very enthusiastic about inquiries and purchases of medium and low-quality 2020/21 and 2021/22 US cotton and Brazilian cotton, and were interested in Indian S-6, J34, etc. form an alternative.
Judging from the survey, due to insufficient domestic demand/export of cotton yarn and falling cotton prices from January to February (Pakistan’s cotton yarn exports in January were only 19,000 tons, down 32% month-on-month and 40% year-on-year), Indian yarn mills were forced to lower their cotton yarn prices. Prices to attract buyers from Bangladesh, China, etc.
According to industry analysts, due to the recent rainfall and low temperature that have delayed the recovery of domestic summer clothing demand in India, coupled with the intensification of the conflict between Russia and Ukraine in the global consumer market, the lingering damage of the epidemic, and the substantial increase in the probability of the Federal Reserve raising interest rates in March, the probability of an interest rate hike by the Federal Reserve in March will increase significantly in the first half of 2022. It may be difficult for Indian textile and apparel companies to pick up their purchasing demand before the quarter. However, compared with the sharp decline in domestic cotton prices in India, Indian cotton shipments, bonded cotton and other quotations have only followed the decline in small steps. Traders are holding up prices and have a strong anti-fall sentiment. . For example, the quotations of Indian cotton M 1-5/32 in China’s main port on February 23 were concentrated at 134.08-134.58 cents/pound (2020/21, including CCI cotton), which was only slightly lower than the quotations in previous days.
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