According to AGM statistics, as of March 26, the cumulative listing volume of Indian cotton in 2022/23 was 2.9317 million tons, significantly lower than last year (with a decrease of more than 30% compared to the average listing progress in three years). However, it should be noted that the listing volume in the week of March 6-12, the week of March 13-19, and the week of March 20-26 respectively reached 77400 tons, 83600 tons, and 54200 tons (less than 50% of the peak listing period in December/January), significantly increasing compared to the same period in 2021/22, The expected large-scale listing has gradually materialized.
According to the latest report from India’s CAI, India’s cotton production in 2022/23 was reduced to 31.3 million bales (30.75 million bales in 2021/22), down nearly 5 million bales from the initial forecast of the year. Some institutions, international cotton merchants, and private processing enterprises in India still believe that the data are somewhat high, and there is still a need to squeeze water. The actual output may be between 30 and 30.5 million bales, which will not increase but will decrease by 2.5-5 million bales compared to 2021/22. The author’s view is that the probability of India’s cotton output falling below 31 million bales in 2022/23 is not high, and the CAI forecast has been basically in place. It is not advisable to be overly short and undervalued, and beware of “too much is too much.”.
On the one hand, since late February, Indian domestic spot prices such as S-6, J34, and MCU5 have been reduced due to fluctuations, and the delivery price of seed cotton has dropped in response. Farmers’ reluctance to sell has again warmed up. For example, the purchase price of seed cotton in Andhra Pradesh has recently dropped to 7260 rupees per tonne, and the local listing process is extremely slow, with cotton farmers holding over 30000 tons of cotton for sale; In central cotton regions such as Gujarat and Maharashtra, farmers are also very common in holding and selling up their goods (they have been reluctant to sell for many months), and the daily purchase volume of processing enterprises cannot maintain the production needs of workshops.
On the other hand, in 2022, the growth trend of cotton planting area in India was significant, and the unit yield was flat or even slightly increased year on year. There was no reason for the total yield to be lower than the previous year. According to relevant reports, the cotton planting area in India increased by 6.8% to 12.569 million hectares in 2022 (11.768 million hectares in 2021), which was lower than the 13.30-13.5 million hectares predicted by the CAI in late June, but still showed a significant year-on-year growth; Moreover, according to the feedback from farmers and processing enterprises in the central and southern cotton regions, the unit yield increased slightly (prolonged rainfall in the northern cotton region in September/October led to a decline in the quality and unit yield of new cotton).
According to industry analysis, with the gradual arrival of the 2023 cotton planting season in India in April/May/June, coupled with the rebound in ICE cotton futures and MCX futures, farmers’ enthusiasm for selling seed cotton may erupt again.
Post time: Apr-04-2023