At the beginning of the new year, cotton prices in India skyrocketed! On Monday (January 3), the spot price of cotton in India exceeded 71,000 rupees/kander, setting a record high. Since the start of the Indian cotton year on October 1, Indian cotton prices have risen by more than 70%.
At present, Indian cotton prices are higher than international cotton prices. 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. .
Since the beginning of this year, the price of Indian cotton has continued to rise. The main reason is that the output and quality of new cotton have dropped due to long-term rainfall. At present, Indian cotton farmers are holding back their cotton. At this stage, the quantity of new cotton in India is scarce, and the premium of new cotton with good color grade is very high. . Currently, the spot price in Gujarat has reached 71,000 rupees/kand, while in some areas of Maharashtra, the price has reached 72,000-73,000 rupees/kand. The price of seed cotton in Rajyot, Gujarat has exceeded 10,000 rupees/quintal, and the price in Telangana is 9,300-9,500 rupees/quintal. Most open market prices are above 9,000 rupees/quintal.
Note: The above is the price of seed cotton, the unit is rupees/quintal
In addition to the reduced production and quality of new cotton, the increase in demand from Indian cotton mills is also an important reason. It is understood that with the epidemic in India under control, the domestic cotton consumption situation in India has been excellent since Diwali 2021. The production and sales of textile mills are smooth, and the return of orders continues to increase, which has also stimulated cotton prices to reach new highs. Moreover, after the sharp rise in cotton prices, India has not shown any signs of switching from cotton to chemical fibers, and spinners are also digesting the rise in cotton prices. Even if the price of processed new cotton rises to 75,000 rupees per kander, ginners are reluctant to sell it easily because the processing cost is very high.
Up to now, the cumulative volume of new cotton in India has reached 12 million bales (170 kg each), factories have purchased 9 million bales, and another 1 million bales have been exported, and the rest are in circulation channels. According to the South India Textile Mills Association, the current price of high-grade cotton newly launched in India is 74,000 rupees per kand, and the factory’s inventory is 1-2 months. However, relevant people in South India said that the actual inventory is less than one month.
According to analysis by Indian industry media, Indian cotton prices may soar further due to continued high demand for Indian yarn in the global market. This year, cotton prices in India have far exceeded the CCI’s minimum support price of Rs 6,025. Since the beginning of this year, the price of cotton in India has remained above 7,000 rupees and has gradually soared. Trade sources said that due to cotton merchants purchasing large quantities of Indian cotton for hedging in the futures market, the current price of Indian cotton is 5 cents higher than the international cotton price. In the future, the premium of Indian cotton prices to international cotton prices will reach 20-25 cents.
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