India'S CCI Price Increase Sales, Chinese Enterprises Actively Purchase

It is reported that on February 23, cotton company of India (CCI) increased the benchmark price of cotton sales in 2019 / 20 and 2020 / 21 by 600 rupees / kand, and lowered the daily listing quantity of cotton in 2019 / 20 to 50000 tons (mainly because CCI had only about 700000 bales of Aged Cotton in 2019 / 20 by the end of February), and increased the daily hanging auction volume of new cotton in 2020 / 21 to 121000 tons. CCI plans to increase the cotton auction and rotation (including export) from March to may, and has obvious intention of returning funds and clearing warehouse.

According to the industry analysis, the reasons for CCI's sharp rise in sales benchmark price are as follows:

First, after the Spring Festival, ice cotton futures continued to break through, while the growth of MCX futures and Indian domestic spot was significantly weaker than ice, American cotton, Brazilian cotton, etc., and the price performance advantage of Indian cotton was more prominent;

Second, CCI's purchase volume in 2020 / 21 is expected to be about 10 million bales, which is not only significantly lower than that in 2019 / 20, but also lower than the expectation of 12-13 million bales at the beginning of the year; in addition, CCI has contracted to sell about 2.2-2.3 million bales of new cotton in 2020 / 21 this year, so far, the total cotton inventory of CCI is less than 8 million bales, and there is little pressure on capital, storage and operation;

Third, the contracted export of American cotton in 2020 / 21 has been oversold. In 2021, according to the first stage trade agreement between China and the United States, China will still purchase a large number of American cotton in 2020 / 21 and 2021 / 22. In 2020, the total output of Australian cotton is expected to be only about 2.5 million bales, and more than 80% of which will be "dish dishes" for Chinese sellers. Considering the high sea freight, tight containers and epidemic prevention and control, the dependence of Asian purchasers such as Bangladesh, Vietnam, China and Indonesia on Indian cotton has only increased.

Cotton Traders in Qingdao, Zhangjiagang and other places said that after the Spring Festival, the spot transactions (bonded + customs clearance) of the ports were mainly Indian cotton and Brazilian cotton, while American cotton was not active due to the strong basis of traders and weak competitiveness (the shipment of customs clearance cotton was more cold due to grade, quality and other reasons). According to a cotton importer in Jiangsu Province, cotton mills and middlemen have a high recognition of the quality and spinnability of Indian cotton in 2019 / 20 and 2020 / 21, and the actual transaction price is generally 100-150 yuan / ton higher than the exporter's price.

From the perspective of quotation, from February 23 to 24, the buy it now price of Indian cotton CCI m 1-5 / 32 in Qingdao port was 500 yuan / ton lower than that of Brazil cotton m 1-1 / 8, and 600-700 yuan / ton lower than that of 31-3 36 / 37 US cotton.