According to AGM statistics, as of March 26, the cumulative market volume of Indian cotton in 2022/23 is 2.9317 million tons, and the listing progress is significantly lower than last year (the average decrease in the three-year listing progress is still more than 30%), but it should be noted that , the listing volume in the week of March 6-12, the week of March 13-19, and the week of March 20-26 reached 77,400 tons, 83,600 tons, and 54,200 tons respectively (less than the peak period in December/January) 50%), a significant increase compared with the same period in 2021/22, and the expected large-scale listing is gradually realized.
The latest report from India’s CAI shows that India’s cotton production in 2022/23 has been reduced to 31.3 million bales (30.75 million bales in 2021/22), which is nearly 5 million bales lower than the initial forecast of the year. Some institutions, international cotton merchants, and Indian private processing companies still believe that the data is a bit high and still need to squeeze out water. The actual output may be 30-30.5 million bales, which will not only not increase but reduce 250,000-500,000 bales compared with the 2021/22 season. The author’s opinion is that there is little chance that India’s cotton output will fall below 31 million bales in 2022/23. CAI’s predictions are basically in place. It is not advisable to be too bearish and bearish, and beware of “too much is too little”.
On the one hand, since late February, the domestic spot quotations of S-6, J34, MCU5, etc. in India have fluctuated downwards, and the delivery price of seed cotton has fallen in response, and farmers’ reluctance to sell has increased again. For example, the purchase price of seed cotton in Andhra Pradesh has recently dropped to 7,260 rupees/quintal, and the local listing progress is extremely slow. The amount of cotton for sale in the hands of cotton farmers exceeds 30,000 tons; while farmers in central cotton areas such as Gujarat and Maharashtra Holding and selling operations are also very common (reluctance to sell for many months), and the daily purchase volume of processing companies cannot maintain workshop production needs.
On the other hand, the growth trend of cotton planting area in India is obvious in 2022, and the yield per unit area is flat or even slightly increased year-on-year. There is no reason for the total output to be lower than the previous year. According to relevant reports, India’s cotton sown area increased by 6.8% in 2022, reaching 12.569 million hectares (the sown area in 2021 is 11.768 million hectares). Although it is lower than the 13.30-13.5 million hectares predicted by CAI in late June, it is year-on-year. It is still growing significantly; and judging from the feedback from farmers and processing enterprises in the central and southern cotton areas, the yield per unit area has increased slightly (the long-term rainfall in September/October in the northern cotton area has led to a decrease in the quality and yield of new cotton).
According to industry analysis, with the gradual arrival of India’s 2023 cotton planting season in April, May, and June, coupled with the rebound of ICE cotton futures and MCX futures, farmers’ enthusiasm for selling seed cotton may explode again.