Since New Year’s Day, news about the Indian market has been flying all over the place. From output to inventory, from consumption to export, from cotton to cotton yarn, the news about the Indian industry is dizzying.
As of the end of December 2021, the volume of new cotton on the market in India was 2.05 million tons of lint cotton, a decrease of 40% compared with the same period last year. From October to November 2021, India’s cotton export volume was only 700,000 bales, a year-on-year decrease of 42%. The Cotton Association of India recently stated that due to too high prices, Indian cotton exports may drop to the level of 600,000 tons this year, a decrease of more than half from the previous season.
With the epidemic in India under control, India’s domestic cotton consumption situation has been excellent since Diwali 2021, with smooth production and sales of textile mills and increasing order returns. India’s apparel exports increased by 35% year-on-year in the first to third quarter of 2021. Inadequate supply coupled with recovery in demand, Indian cotton futures rose by 31% from October to December 2021, spot prices rose by more than 70%, domestic cotton yarn prices rose by 15%, and export prices rose by 27%.
On January 3, the main March contract of ICE cotton futures was at 113.67 cents/pound, approximately 68,500 rupees/kander, while the price of the January contract of Indian cotton futures has reached 34,700 rupees/pack, approximately 74,502 rupees/kander. . Indian cotton prices are already higher than international cotton prices. Against the background of the recovery of global cotton consumption, insufficient supply of Indian cotton exports will exacerbate short-term supply constraints, and US cotton exports will also benefit from this.
While India’s domestic market started, international cotton prices also started a new round of rise around Christmas. Since the end of December, the main price of ICE cotton futures has risen from 105 cents to 115 cents. This round of increase is mainly driven by the external market, and the rapid rise in prices has once again suppressed spot demand. In the short term, the market has a need for correction and consolidation. After the beginning of the New Year, cotton planting intentions and supply and demand in the new year began to be put on the agenda. Currently, the ICE futures December 2022 contract has risen to a new high of 94 cents. Foreign analysts believe that although high cotton prices will stimulate the expansion of cotton planting, the specific development of the situation needs to be observed. Considering the surge in production costs and the continued recovery of consumption, US cotton inventories may remain at the current level or decline. This provides support for the long-term trend of cotton prices.
</p
