As of last weekend, India’s CCI has purchased a total of 1.547 million tons of cotton in 2020/21 (approximately 9.2 million bales purchased), of which about 365,500 tons have been auctioned. The main buyers are Indian domestic yarn mills, international cotton traders and A few cotton textile companies from China, Bangladesh, Vietnam and others.
In addition, the remaining cotton inventory in 2019/20 is about 110,500 tons, because since mid-to-late January, the overall purchase price of seed cotton in major cotton-producing areas such as Gujarat, Maharashtra, Telangana, and Punjab has exceeded 6,000 rupees/kand (Gujarat The acquisition price of S-6 has reached 6200-6400 rupees/kand), so the CCI acquisition volume has been significantly reduced, and some acquisition centers have been suspended.
Some Indian cotton companies and international cotton merchants believe that as the epidemic in Europe and the United States reaches an inflection point in 2021, the Federal Reserve maintains low interest rates, the Biden administration launches a massive economic stimulus plan, and global trade, economy, transportation, etc. continue to recover, etc., good news will be released , CCI can be described as a “fisherman’s profit”:
First, the auction sales of Indian old cotton and new cotton are accelerating. Under the background of quantitative easing in the United States, bulk commodities such as energy, chemicals, and agricultural products have surged successively. The quotations of foreign cotton such as U.S. cotton and Brazilian cotton have not only closely followed the ICE market, but also the basis has continued to increase, while Indian cotton and Brazilian cotton have continued to rise. Compared with competitors such as cotton, American cotton, and West African cotton, their advantages are becoming more and more prominent due to their “high quality and low price”. Both 2019/20 and 2020/21 CCI cotton have attracted the attention and favor of Indian domestic yarn mills and international cotton buyers;
Second, CCI’s acquisition volume was significantly lower than expected, and the pressure on funds, warehousing, and operations was light. Driven by the rise in ICE and MCX futures, the rapid recovery in domestic and foreign cotton consumer demand, and the high-priced purchases by CCI, the purchase price of seed cotton by domestic private enterprises in India has risen from 3,000-4,000 rupees/candel at the beginning of the year to more than 6,000 rupees/candel, which is significantly higher than MSP Price, therefore CCI’s annual acquisition volume is expected to be lowered from 12 million bales to 10 million bales. Not only does the operating pressure weaken, but the capital flow is abundant.
Several cotton companies in Henan, Shandong and other places said that due to the current port bonding and March/April shipping schedule, Indian cotton quotations are on the high side due to the increase in basis differentials by international cotton merchants and import traders (the profits of trading companies are on the high side) Therefore, it is recommended that if conditions permit, directly contract and purchase Indian cotton in 2020/21 from ginners or exporters in Gujarat, Maharashtra, etc. The cost reduction will be obvious; however, issues such as shipping schedules, quality control and claims need to be considered in advance. comprehensive.
It is understood that from February 18th to 19th, the quotation of M 1-5/32 Indian cotton in Qingdao Port was 89.50-91.50 cents/pound, while the spot quotation of M 1-5/32 Brazilian cotton was 95.50-96.50 cents/pound. The shipping date of February/March US cotton is 31-3 36/37, which is quoted at 95-96 cents/pound. The price competitive advantage of Indian cotton is greatly reduced. </p
