Recently, Indian Textile Minister Piyush Goyal said at a textile industry meeting that a cooperative spirit should be adopted to solve the cotton pricing problem, and traders should not hoard goods to speculate on cotton prices and make profits. , let alone put pressure on relevant departments to ask for government intervention. It pointed out that cotton prices should give full play to the market adjustment mechanism and rely on the mutual support of stakeholders in the industry chain to achieve long-term sustainable growth.
Obviously, the Indian Textile Minister’s target is CCI, because China’s cotton contract volume with India in 2020/21 has increased significantly year-on-year, and it mainly comes from CCI inventory. As a result, there is currently very little CCI cotton inventory left in India, which is difficult to meet India’s domestic demand. Cotton mills consume demand; while Tiruppur Exporters Association president Raja M Shanmugham has sent an urgent message to Prime Minister Narendra Modi, listing out the difficulties caused by cotton traders-multinationals-CCI to cotton farmers and textile industry, claiming that they are passing through Manipulate the market in a reasonable manner. It said that this strategy of CCI has the potential to destabilize the textile industry, which is the only labor-intensive industry in the country. Cotton traders and some multinational companies reserve large quantities of lint from CCI in advance, allowing CCI itself to take advantage of it intentionally or unintentionally. Its function is to create artificial demand in the market. Therefore, rumors that the Indian government will introduce policies to restrict cotton exports in 2021/22 have spread, which has also had some impact on the short-term global cotton market trend.
So will India ban cotton exports in 2021/22? Judging from the feedback from several private ginneries and cotton exporters in Gujarat, Maharashtra and Punjab, the probability of banning exports is relatively low. Most cotton companies, CAI, CAB, CCI, etc. are opposed to yarn. It is expected that the “repetition of the same old tune” proposed by the Ministry of Industry and Textiles will be difficult to be reviewed and approved by the Modi government. The reasons include the following three points:
First, the domestic seed cotton delivery price in India in 2021/22 is significantly higher than the MSP (the price of seed cotton in Punjab hit 10,500 rupees/quintal on November 1, 2021, 77% higher than the MSP), so it is more difficult to “open” CCI acquisitions If it is too large, it is very likely that the grains will not be collected; and currently CCI only has a few thousand tons of old cotton in stock, so banning exports makes no sense.
Second, it is relatively difficult for the Indian government to revoke the 10% tariff on imported cotton in the short term. Although spin mills and cotton traders have made strong calls, once cotton imports continue to be blocked and exports are banned, the production and sales of Indian cotton will be “closed.” Management, 100% self-production and self-marketing will cause Indian cotton to be separated from the international market, and cotton textiles, clothing, etc. will be weakened and despised by buyers.
Third, India’s total cotton output in 2021/22 is expected to be around 6.1 million, which is still significantly higher than consumption; coupled with opening stocks and imports, there is no gap, and the government has no reason to restrict or ban exports. According to CAI and CCPC, India’s cotton output in 2021/22 is forecast to be 6.122 million tons and 6.154 million tons respectively; USDA’s latest report predicts India’s cotton output this year to be 6.096 million tons, both higher than India’s cotton consumption in 2021/22, which is about 500,000 tons. Moreover, according to the efficiency of the Indian government, even if the Ministry of Textiles and other departments propose proposals, there will be no substantial progress in the short term.
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