Even before the COVID-19 pandemic, the international market had been wary of the acquisition of CCI in India. No matter how much cotton is collected, it will flow into the market sooner or later, whether it is the domestic or international market in India.
Nowadays, the epidemic is far from over, and Indian cotton is beginning to be ready.
Due to the impact of the epidemic and the blockade, the low-grade cotton in the hands of Indian cotton farmers cannot be sold. The quality of cotton has also begun to decline over time, and the demand from domestic cotton mills in India is also obvious. not enough. As cotton continues to be put on the market in 2019, cotton farmers have more and more cotton in their hands. If it cannot be exported as soon as possible, sales pressure will increase.
This year, India’s CCI purchased basically high-grade cotton, while private ginneries sold basically low-grade cotton. The export quotations for these cottons were extremely low, and the quantities were considerable. considerable. Last week, Chinese traders began to offer a large number of low-grade Indian cotton at ultra-low prices, with prices 1,000-1,500 points lower than US cotton, Brazilian cotton and West African cotton.
At this stage, there are no buyers for low-grade, low-price Indian cotton in the Chinese market. It remains to be seen whether it will have an impact on traders who have a large amount of US cotton in the bonded area. observe. In the past six months or so, traders’ bonded cotton quotation basis has been quite strong, but the funds held by inventories have exceeded US$1 billion. In the current environment, this is no longer a small amount. The entry of Indian cotton into the international market at such a low price has indeed attracted some buyers. The demand for Indian cotton in Bangladesh and other regions is very active.
At present, the basis difference of Indian cotton merchants’ S-6 SM 1-5/32 quotation is +100/150 points for the July contract, which is much lower than that even if the quality is taken into account. In other producing areas, it is a big question whether cash-strapped yarn mills can continue to purchase US cotton, Brazilian cotton and West African cotton whose prices are 1200-1400 points higher. The chart below shows that the basis difference of all grades of Indian cotton is much lower than that of other varieties.
With the growth of Indian cotton As the market continues to go on the market, domestic cotton prices have a further downward trend. Moreover, CCI is selling cotton in stock at low prices, with a price reduction of 10,000 rupees/kander for purchases of more than 10,000 bales, which is equivalent to 23.57 cents/pound. Currently, the price of S-6 1-1/8 in private transactions in India has fallen to 55.20 cents/pound, a new low this year, while the psychological price of cotton merchants is even as low as 50.50 cents/pound.
Recently, the daily market volume of Indian cotton has increased to more than 30,000 bales. CCI has also been active in purchasing after the spot market reopened. However, as the cotton stocks in various parties continue to increase, Cash flow is becoming increasingly tight, and CCI only purchases high-grade cotton (Grade 1), which continues to put downward pressure on low-grade cotton. </p
