According to USDA’s latest monthly report, India’s total cotton production in 2019/20 was 6.423 million tons, with exports of 871,000 tons and imports of 479,000 tons; ICAC forecasts India’s production and export data to be 6 million tons respectively (a difference of 423,000 tons from USDA tons), 900,000 tons. According to the forecast of the Cotton Association of India, India’s cotton output in 2019/20 is 35.45 million bales (6.0265 million tons), a year-on-year increase of 13.6%; the export volume is 4.2 million bales (714,000 tons). The export forecast of the Indian Cotton Advisory Committee is 5 million package), the gap with the USDA’s monthly output and export volume reached 396,500 tons and 157,000 tons respectively.
Obviously, all parties have overestimated the export situation and competitiveness of Indian cotton in 2019/20 , U.S. cotton, Brazilian cotton, West African cotton, etc. continue to seize international market share. According to statistics, as of the end of November, only 600,000-700,000 bales of Indian cotton had been shipped and exported, and the total export contract volume was less than 1 million bales (including 2018/19 old cotton). Compared with the same period of 2015-2017, the number of Indian cotton contracts was a “blowout” Growth is in sharp contrast.
The author believes that the actual export volume of Indian cotton in 2019/20 will be less than 3.5 million bales or even 3 million bales (not higher than 600,000 tons). The reasons are summarized as follows:
First, due to the geopolitical tensions between Pakistan and India, which were at war with each other for a time, Pakistani yarn mills turned to large quantities of American cotton, Brazilian cotton, West African cotton, Central Asian cotton, and Indian ginning. Mills and exporters have lost their most important and stable buyers;
Second, MSP’s high-price acquisitions have led to an increase in India’s domestic cotton price to about 38,500 rupees/kander (about 74 cents) / pound), the domestic selling price and export quotation of Indian cotton are both high. Compared with cotton from other origins, including US cotton, it is “not cheap, not good-quality” and not very competitive;
Third, from the survey, the quality and spinnability of S-6, MCU5, J34 in cotton areas such as Gujarat and Mabang declined more prominently in 2019/20. In addition, the rolling quality, “three yarn ”, packaging and other improvements are not obvious, and the matching with the demand for enterprise spinning of medium and high-count yarns has declined;
Fourthly, China and the United States have reached the first phase of a trade agreement, and China will open the door to US cotton The buy-buy-buy model (cotton is in the agreed import list, but it is not clear how it will be imported), plus Brazilian cotton and West African cotton are increasingly recognized by buyers from China, Vietnam, Pakistan, Bangladesh and other countries. Indian cotton exports are likely to become a “walk-in”;
Fifth, the continued appreciation of the Indian rupee is not conducive to the export of cotton, yarn and other products. The Indian rupee’s strong rebound this month (up about 1%) has made it the best-performing currency among major Asian economies. </p
