The Rising Trend Of Global Cotton Price Stimulates Indian Cotton Farmers

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According to foreign news on March 18, Indian cotton farmers have taken advantage of this opportunity to sell at least 80% of their cotton crops due to the rise in global cotton prices this year (October 2020 to September 2021).

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As a result, most of the processing plants that process seed cotton (raw cotton) into lint may close in April in parts of northern and western India.

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Since October, most of the cotton produced this year has been transported to various domestic markets as cotton prices have risen above the minimum support price (MSP) of 5515 rupees per kilogram.

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"Apart from some wealthy farmers who hold 15-20 per cent of seed cotton, the rest of the output has also arrived in the market," said Anand poppat, a trader in rajagoad. These farmers always hold and wait for the monsoon rainfall season to sell because they can get better prices in the off peak season. "

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**Increased inflow**

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According to the estimation of the cotton association of India (CAI), the arrival volume from October 1 to the end of February is 29.889 million bales (170 kg / bag).

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Cai estimates the cotton crop output in India at 35.85 million bales, compared with 36 million bales last year. The cotton production and consumption Commission (CCPC) estimates that cotton crop production will be 37.1 million bales this year, up from 35.85 million bales in the previous year.

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Despite a record carry over inventory last year, deliveries are still high. Cai estimates that the carry over inventory will be 11.5 million bales, and CCPC will be 9.795 million.

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This year's cotton price is higher than the minimum support price, the main reason is that the global cotton price soared. Since June last year, cotton prices have soared, given that consumption is higher than production.

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In the current market year (August 2020 July 2021), USDA expects global production to be at a four-year low, while consumption will exceed production for the second consecutive year.

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**The price goes up**

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Since this year, cotton prices in New York have risen nearly 11%. In fact, cotton prices are off the high above 90 cents a pound hit at the end of last month.

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Currently, cotton futures on the ice are trading at about 86.13 cents per pound (INR 49600 / candy), while Indian exporters are quoting INR 45900-46200 per candy for benchmark shankar-6 cotton.

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This year, Indian cotton export offers are competitive, ranging from RS 44000-48000 per candy. This has helped seed cotton prices rise in most markets.

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At the Market Committee for agricultural products (APMC) in rajagoth, Gujarat, the price of seed cotton is close to INR 6100 per kilogram. "But high quality cotton costs as much as 6700 rupees," poppat said.

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"Cotton arrivals increased this year as farmers got good prices," says Sima

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Most farmers have sold out of cotton, or they want to hold inventory, because of the high volume of goods in the market by the end of February, as prices are expected to rise later or in the off peak season starting in May.

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According to the domestic market news, the arrival volume of the market from March 1 to 15 is about 100000-150000 bales per day. At present, it has been reduced to 70000-80000 bags / day.

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"There are less than 100000 bags on the market these days. The other problem is that even low quality cotton is sold at high prices. We expect at least 50% of the cotton mills to be closed by the end of this month, since the arrival volume has fallen below 100000 bales. "

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"This year's cotton quality is not as good as last year due to off season rainfall," selvaraju said.

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Market sources said that due to the low arrival volume, many ginners have finished production.

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Poppat said one of the main reasons why cotton farmers are eager to sell cotton to the market this year is the painful experience of last year, when the outbreak of the new crown epidemic led to price collapse.

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"Cotton farmers are slow to release cotton, so ginners are operating through the end of the season," he said, adding that farmers were quick to take advantage of rising prices to release their stocks this year.

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**Inventory, export**

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Including the carryover inventory, Cai estimates that the total consumption from October last year to January this year will be 13.75 million bales, while cotton mills are expected to hold 9.25 million bales of inventory.

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The cotton company of India (CCI), which has 9.25 million bales in stock, has been reported to have purchased nearly 10 million bales as part of the government procurement plan, while ginners, multinationals and the Indian multi commodity exchange (McX) are expected to hold a total of 16.489 million bales.

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Poppat said at least 4.4 million bales of cotton had been exported until last week. Cotton exports totalled 5 million bales last year and are expected to increase to 6.5 million bales this year.

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Market sources said exports slowed down due to the appreciation of the rupee and insufficient container supply. Poppat said container supply was the main problem. "Bangladesh is the largest buyer of Indian cotton, followed by Vietnam, China and Turkey."

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Market sources pointed out that in the inventory held by CCI, about 4.2 million bales of cotton have been sold and have not been accepted by buyers. The total government inventory, including Maharashtra, will be around 11 million bales.

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Poppat said there might not be much room for cotton prices to rise due to profit taking. "Speculators in the US market have begun to reduce their positions."

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Market sources pointed out that the cotton market is experiencing a correction due to concerns about the impact of the second wave of the epidemic and investors taking profits. 　　

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