Is India Cotton Cheap To Kill Cotton Price To Be Dragged Down?

Now, India spinning mill has two problems in purchasing domestic cotton. First, liquidity is very tight, and two is India's domestic collapse after the closure of the city in April. In April, India's PMI fell to 7.2, PMI in service industry was 5.4, manufacturing PMI was 27.4, GDP contracted 15.2% in the same month, 122 million people in the country were unemployed, liquidity in all walks of life was sharp, and banks had stopped lending to non bank institutions, resulting in fund companies closing some of the prime money.

Liquidity tension has brought a chain reaction to India's cotton industry. Cotton farmers need to sell cotton for cash, and the ginning mills need to sell their stocks to make room for processed cotton, so exporters need to find customers. Traders are very clear about this, so some international cotton traders offer a few cents lower than the normal price, which also brings greater pressure to India cotton prices. According to the price tracking of China's cotton network, although ICE futures continued to rise for several days, all other varieties quoted prices were rising, but the price of India cotton did not rise or fall, indicating the urgency of India's export of cotton.

In the short term, due to the slow recovery of cotton consumption in India in April, and the tight liquidity in India, there may be a large number of India cotton entering the export market. To be fair, it is not easy for India cotton to seize the site of the US cotton, Brazil cotton and West African cotton. Even if China's import demand increases, it will not import large quantities of India cotton. Now Pakistan, India's "good neighbor", can not contribute to India's cotton exports. Last week, Bangladesh purchased some cotton from India, but Bangladesh still had a large number of US cotton orders not shipped. On the whole, under the condition of global consumption weakness, it is difficult for India cotton to be heavily absorbed by the importing countries in the remaining three months of the year.

It is reported that the India cotton association is appealing to the government to provide 5-10% rebates for cotton and cotton yarn exports so that the mills can have enough funds to procurements. At present, 2019/20 cotton price and Brazil cotton quotation are very strong in the year of the year. The US E/MOT standard level and Brazil M 1-1/8 are all more than 10 cents higher than India S-6 1-1/8. They are highly competitive in the Chinese market and should be able to stimulate the export sales of India cotton. With the rise of ICE futures, the price advantage of India cotton is beginning to show, which will bring pressure to other varieties of base, and may lead to slower turnover of cotton and Brazil cotton.