COTTON NEWSLETTER

 

Market Highlights

Domestic

• 
  For the 2021-22 season, cotton narma prices have reached Rs. 8500-9000 per quintal in the Anupgarh market of Sri Ganganagar. The minimum support price fixed by the government for medium stable is Rs. 5726 and for long stable Rs. 6025 per quintal. 
• Trend of cotton arrival in different mandis of Punjab’s southern districts is not indicative of major crop loss at this stage. Initial girdawari inputs submitted last week claimed that standing crop on 4-lakh acres of the 7-lakh acres’ area was severely hit. However, the sale of raw cotton in mandis is inconsonant with the loss projections.
• 
  Cotton production in Gujarat is likely to grown by 10-12% in the new cotton season begining in october. Despite lower acreage, the output is expected to increase in 2021-22 due to the improved yield following recent spell of rain and favourable climatic conditions. A recent Pan-India survey conducted by a Mumbai-based company dealing in cotton pegged Gujarat’s production at 105 lakh bales in 2021-2022.The state’s total cotton crop output had stood at 93.50 lakh bales.
• The new season has kicked off on a good note for over 3.5 lakh cotton growers from North Maharashtra as the sale price of raw cotton significantly higher than last year. This season, the cotton growers are fetching on an average Rs 7,000 for one quintal of raw cotton. Last season, the sale price was below Rs 5,000 a quintal. The Covid pandemic had impacted both, the cotton farmers and traders, last year Now things are fast improving.
• 
  For 2021-22, India cotton production is estimated to decrease to around 350.25 lakh bales, as the area sown under cotton has decreased as compared to the previous season. 
•  Due to the good export parity in 2020-21, exports are likely to have increased to 75 lakh bales. Whereas, the imports in 2021-22 are likely to be around 10 lakh bales same as in the 2020-21 season. The total cotton availability by the end of the season in 2020-21 is estimated at 478.82 lakh bales and a lower availability is expected in the 2021-22 season of around 439.07 lakh bales.
  
• Total domestic mill consumption (excluding non- mill consumption) in 2021-22 is expected to increase to 278.00 lakh bales in 2020-21, with the coming of festivals and also due to relaxation in lockdown restrictions in several states across the country.
  
•  So, the increase in consumption has resulted in lowering ending stocks of around 78.82 lakh bales in 2020-21 and is likely to occur this year too, the ending stocks by the end of 2021-22 season is estimated to be 49.07 lakh bales.

International:

•  ICE cotton prices have gained a tad over 50% year-on-year rising to 108.67 cents a pound (Rs 66,025 a candy).
  
  
  
•     Cotton consumption in China is expected to move up in market year (MY) 2021-22 due to the rising demand for textiles and clothing from domestic and overseas markets. However, cotton production in China is expected to decrease as the area of cotton harvested has dropped in Yellow River and Yangtze River regions of the country. China cotton production is expected to decrease by 7.5% in MY 2021-22 to 5.92 million 480 lb bales. China cotton export expected to reduce by 7.14% in MY 2021-22 to 2.60 million 480 lb bales.
•        For, 2021-22, Brazil cotton production and exports may go up in the current market year as the area under cotton plantation is expected to rise. The increased production and exports may be attributed to the global cotton price rise, the country weak domestic currency and the decreasing domestic consumption of cotton. Brazil cotton production in the current market year is expected to go up by 8.95% to 2.68 million metric tons.
  Global cotton output is seen rising by 6% with expected rise in the output in the growing countries of Australia, Brazil and the US. The ending stocks for 2020/21 has been revised downward to 20 million tonnes, leading to the world cotton supply to be around 45.8 million tonnes for the 2021/22 season. The global consumption is estimated at 25.9 million tonnes.
•         U.S. cotton supply and demand estimates show lower production, lower ending stocks, and a higher price compared with last month. Production is lowered 3%, to 18.0 million bales as projected yields in Texas are reduced. With domestic mill use and exports remaining unchanged, ending stocks are 500,000 bales lower. At 3.2 million bales, U.S. ending stocks in 2021/22 are projected at 18% compared with 17% in 2020/21.
•      Cotton consumption in China is expected to move up in market year (MY) 2021-22 due to the rising demand for textiles and clothing from domestic and overseas markets. However, cotton production in China is expected to decrease as the area of cotton harvested has dropped in Yellow River and Yangtze River regions of the country. China cotton production is expected to decrease by 7.5% in MY 2021-22 to 5.92 million 480 lb bales. China cotton export expected to reduce by 7.14% in MY 2021-22 to 2.60 million 480 lb bales.
•        For, 2021-22, Brazil cotton production and exports may go up in the current market year as the area under cotton plantation is expected to rise. The increased production and exports may be attributed to the global cotton price rise, the country weak domestic currency and the decreasing domestic consumption of cotton. Brazil cotton production in the current market year is expected to go up by 8.95% to 2.68 million metric tons.  
• 
  Global cotton output is seen rising by 6% with expected rise in the output in the growing countries of Australia, Brazil and the US. The ending stocks for 2020/21 has been revised downward to 20 million tonnes, leading to the world cotton supply to be around 45.8 million tonnes for the 2021/22 season. The global consumption is estimated at 25.9 million tonnes.
•    U.S. cotton supply and demand estimates show lower production, lower ending stocks, and a higher price compared with last month. Production is lowered 3%, to 18.0 million bales as projected yields in Texas are reduced. With domestic mill use and exports remaining unchanged, ending stocks are 500,000 bales lower. At 3.2 million bales, U.S. ending stocks in 2021/22 are projected at 18% compared with 17% in 2020/21.

Conclusion 

     The rise in cotton prices is due to delayed arrivals because of bad weather and also due to a decrease in area under cotton cultivation, yield loss due to rains, and a speculative swing in the international market. The pink bollworm pest has adversely affected the yield of the cotton crop in northern states Haryana, Punjab, Rajasthan that impacted the production of the crop. The Prices may come down to some extent after Diwali when arrivals will increase, prices would remain firm up in the long run.