India Cotton farmers hold cotton and are reluctant to sell it. Export of cotton decreases greatly

According to Reuters, Indian industry officials said that despite the increase in Indian cotton production this year, Indian traders are now difficult to export cotton, because cotton farmers expect prices to rise in the next few months, so they delayed selling cotton. At present, India’s small cotton supply makes the domestic cotton price much lower than the international cotton price, so cotton export is obviously not feasible.

The Indian Cotton Association (CAI) said that India’s new cotton harvest began last month, but many cotton farmers are unwilling to sell, and they hope that the price will rise as last year. Last year, the sales price of cotton farmers hit a record high, but this year’s new flower price may not be able to reach the level of last year, because the domestic cotton production has increased, and the international cotton price has fallen.

In June this year, affected by the soaring international cotton price and the reduction of domestic cotton production, the cotton price in India reached a record 52140 rupees/bag (170 kg), but now the price has dropped nearly 40% from the peak. A cotton farmer in Gujarat said that the price of seed cotton was 8000 rupees per kilowatt (100 kg) when it was sold last year, and then the price rose to 13000 rupees per kilowatt. This year, they do not want to sell cotton earlier, and will not sell cotton when the price is lower than 10000 rupees/kilowatt. According to the analysis of the Indian Commodity Research Institute, cotton farmers are expanding their warehouses with their income from the previous years in order to store more cotton.

Despite the increase in cotton production this year, affected by the reluctance of cotton farmers to sell, the number of new cotton on the market in India has decreased by about one third compared with the normal level. The forecast of CAI shows that India’s cotton output in 2022/23 will be 34.4 million bales, a year-on-year increase of 12%. An Indian cotton exporter said that up to now, India has signed a contract to export 70000 bales of cotton, compared with more than 500000 bales in the same period last year. The trader said that unless Indian cotton prices fell or global cotton prices rose, exports were unlikely to gain momentum. At present, Indian cotton is about 18 cents higher than ICE cotton futures. To make export feasible, the premium needs to be reduced to 5-10 cents.