Recently, the Cotton Association of India (CAI) not only increased the total cotton production in 2019/20 by 1.9 million bales, but also reduced India’s cotton consumption this year by 3 million bales month-on-month. The ending inventory was raised to 10.25 million bales, which is a relatively large adjustment. , which caught some international cotton merchants and purchasing companies off guard.
Going back in time, USDA’s June global cotton supply and demand report estimated that India’s cotton carryover stock as of July 2020 was 19.8 million bales (CAI’s latest forecast was 14.34 million bales, and there was a difference of 5.46 million bales). million bales), was questioned and criticized by various Indian departments such as CAI, CCI, CAB, etc., believing that USDA had “ulterior motives in suppressing Indian cotton exports.” However, only two months later, India began to “break its promise” and proactively lowered the 2019/ The increase in consumption and ending inventory in 2020 is a bit of a “slap in the face”.
So how do you view the large gap and “war of words” between CAI and USDA in India’s carryover inventory at the end of the period? The author recently conducted a brief survey on several international cotton merchants and ginners in Gujarat, India. The opinions in the industry are more inclined to recognize USDA data and are skeptical of CAI and CAB data. The opinions are summarized as follows:
First, the estimates of domestic cotton consumption in India in 2019/20 by government departments such as CAI and CCI are low. The latest reports of USDA and ICAC believe that India’s cotton consumption in 2019/20 will be 4.355 million tons and 4.59 million tons respectively, while the data predicted by India’s CAI is only 4.25 million tons (25 million bales), which is 105,000 tons lower than the USDA report. ICAC reported 340,000 tons; mainly stimulated by the Indian government’s forced restart of the economy in April/May despite the epidemic and the diversion of orders from Europe, the United States, Japan and South Korea to India and other Southeast Asian countries; at the same time, the continued depreciation of the Indian rupee against the US dollar also affected Indian cotton yarn, Exports of gray fabrics, clothing, etc. are “adding fuel to the flames”;
The second is that India’s cotton export volume estimate for 2019/20 is on the high side. CAI predicts that India’s cotton exports will be 5 million bales (about 850,000 tons) this year, while the USDA report estimates that its export volume is only 631,000 tons, a difference of 219,000 tons. According to statistics from relevant Indian departments, as of late July, CCI had only contracted to sell about 900,000 bales of cotton. Although the price/performance ratio has improved recently, including the attention of buyers from China, Bangladesh, Vietnam and other countries, and procurement has picked up, an international cotton merchant predicts that as of mid-August, Indian cotton exports in 2019/20 will not exceed 2 million bales, still far from the target of 5 million bales;
Third, USDA’s forecast of India’s cotton output in 2019/20 is more accurate and objective than CAI, CAB, etc. USDA’s latest report predicts India’s cotton output in 2019/20 to be 6.641 million tons (equivalent to 39.06 million bales), while CAI’s production data is only 35.45 million bales. The gap between the two is 3.61 million bales, which is not small. Several cotton processing companies and exporters in Kupang and Mabang said that because farmers still have a certain amount of unsold seed cotton (or nearly 1 million bales), and ginners generally have large lint stocks, CAI data It should be on the low side, with the actual total output in 2019/20 being no less than 38 million bales.
An international cotton trader judged that the next forecast of CAI will not only increase the cotton production in 2019/20 again, but also the annual cotton export volume is likely to be reduced from 5 million bales to 4 million bales or even lower. Data As we move closer to USAD and align ourselves with each other, wouldn’t it be clear at a glance who slapped whom in the face?
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