Cotton Prices Plummeted, India Cotton Imports Blocked

According to the cotton trade enterprises in Qingdao, Zhangjiagang, Guangzhou and other places, since March, port bonded, customs clearance and 3/4/5 month shipping time of India cotton inquiry, turnover continued to cool, shrink (overall port bonded + non bonded cotton inventory continued to grow slightly, shipping is scarce), some traders said more than a week did not sign sales or even a small house.

From the survey point of view, as of the end of 3 months ago, China's main port 2018/19 India Chen cotton has been basically sold out (price, quality and other indicators than Brazil cotton, West Africa cotton has an advantage, faster turnover in 11/12 month), while the number of cotton bonded and customs clearance in India 2019/20 has been increasing for more than a month, although there are still some differences with the cotton, Brazil cotton and Uzbekistan cotton stocks. But the momentum of catching up is fierce. 3/4 hopes to keep pace with the US cotton in the month.

According to the India Cotton Association's forecast, India's cotton export volume in 2019/20 is estimated at 4 million 200 thousand packages (about 714 thousand tons); the latest monthly report of USDA predicts that the export volume of India's cotton will be 784 thousand tons, but the following factors will form resistance to India's cotton exports, and the uncertainty of the target will be increased.

First, India's cotton prices are high and export competitiveness has declined sharply. With the ICE futures contract continuing to explore a new low, the US cotton, Brazil cotton, West Africa cotton and other spot quotes have been greatly reduced (ICE as the bidding system), while India cotton by MSP price, CCI open buyout "bottom", the spot quotation performance is strong. At present, China's main port ME/EMOT M 1-5/32 (strong 28-30GPT) is generally lower than India cotton M 1-5/32's quotation of 4 cents / pound.

Two, Chinese textile enterprises and traders have greatly reduced interest in India cotton. On the one hand, during the outbreak of the new crown epidemic in India, the government of the India banned the export masks and closed the export market to China. Not only part of the contracts were defaulted, but also India cotton was strongly resisted by Chinese enterprises. On the other hand, with the start of import tariff regulation procedures in 2 and March, the quality, consistency and stability of the US cotton were better than those of the Chinese importers. Attention and favor, India cotton "marginalized"; of course, from the port spot, India cotton "not beautiful, the price is not cheap";

The three is the global outbreak of the new crown pneumonia outbreak. The freight rate has risen sharply and the India rupee has continued to decline against the US dollar to restrict the export of cotton. As Italy, Iran, Spain, France, Germany and the United States and other countries were successively attacked by the epidemic, they took measures such as closing the city and closing the border, resulting in a great impact on trade, logistics and exchanges. With the US Federal Reserve's interest rate cut of +QE, the European Central Bank opened the gate to drain the water, so as to weaken the impact of the epidemic on India's real economy and capital market. The Central Bank of India has to cut interest rates to stimulate the rupee exchange rate.