In 2022/23, the cumulative listing volume of Indian cotton reached 2.9317 million tons, significantly lower than last year (with a decrease of over 30% compared to the average listing progress in three years). However, it should be noted that the listing volume from March 6-12, March 13-19, and March 20-26 reached 77400 tons, 83600 tons, and 54200 tons respectively (less than 50% of the peak listing period in December/January), a significant increase compared to the same period in 2021/22, and the expected large-scale listing is gradually realized.
The latest report from India’s CAI shows that India’s cotton production has been reduced to 31.3 million bales in 2022/23 (30.75 million bales in 2021/22), a decrease of nearly 5 million bales compared to the initial forecast for the year. Some institutions, international cotton merchants, and private processing enterprises in India still believe that the data is somewhat high and still need to be squeezed. The actual production may be between 30 to 30.5 million bales, which is not only not expected to increase but also a decrease of 250000 to 500000 bales compared to 2021/22. The author’s opinion is that the probability of India’s cotton production falling below 31 million bales in 2022/23 is not high, and the prediction of CAI is basically in place. It is not advisable to be overly bearish or undervalued, and be cautious of “too much is too much”.
On the one hand, since late February, the spot prices of S-6, J34, MCU5 and other commodities in India have been fluctuating and reduced, leading to a decrease in the delivery price of seed cotton and a resurgence of farmers’ reluctance to sell. For example, recently, the purchase price of seed cotton in Andhra Pradesh has dropped to 7260 rupees/public load, and the local listing progress is extremely slow, with the cotton farmers holding more than 30000 tons of cotton for sale; And it is also very common for farmers in central cotton areas such as Gujarat and Maharashtra to hold and sell up their goods (persistently reluctant to sell for many months), and the daily acquisition volume of processing enterprises cannot meet the production needs of the workshop.
On the other hand, the growth trend of cotton planting area in India in 2022 is obvious, and the yield per unit area remains unchanged or even slightly increases year-on-year. There is 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% in 2022, reaching 12.569 million hectares (11.768 million hectares in 2021). Although it was lower than the CAI’s forecast of 13.3-13.5 million hectares in late June, it still showed a significant year-on-year increase; Moreover, according to feedback from farmers and processing enterprises in the central and southern cotton regions, the yield per unit area has slightly increased (prolonged rainfall in the northern cotton region in September and October led to a decrease in the quality and yield of new cotton).
Industry analysis shows that with the gradual arrival of the 2023 cotton planting season in India in April, May, and June, coupled with the rebound of ICE cotton futures and MCX futures, farmers’ enthusiasm for selling seed cotton may once again erupt.
Post time: Apr-10-2023