India'S Cotton Imports Are Worth Looking Forward To.

According to the US Department of agriculture weekly export report, since May, India signed the import of 2018/19 cotton in the United States, and continued to exert its strength from 6000 tons / week to 17 thousand and 600 tons / week. Moreover, with the main contract of ICE falling below 65 cents / pound, India cotton mills and traders raised the climax of the enquiry and procurement of bonded, spot and ship cargo, and made a sharp contrast with the US cotton exports to China's market, "three and exhaustion".

Another noteworthy phenomenon is that although ICE plunged 10 cents, CCI began to sell 140 thousand bales of cotton reserves in the domestic market in April, and India cotton yarn exports suffered "Waterloo" (especially in the Chinese market), and the cotton growing area in India increased by 7-8% in 2019. However, the price of domestic cotton mills, CNF (CIF), FOB and other quotations in India cotton did not change much downward even with ICE, and there was no blind spot following the spot slump, such as ICE, US cotton and Australia cotton.

At the end of May, the price difference between S-6 1-5/32 and SM 1-1/8 Brazil cotton and SM West Africa cotton reduced to 0.5-1.0 cents / pounds, overlapping with EMOT/MOT and ME, or even "hanging upside down".

Why can't cotton prices in India fall, and import growth is worth looking forward to?

The author summarizes the following points:

First, the supply of high grade cotton in India is very short, and the demand for textile mills is sustained.

In 2018/19, the main cotton producing areas in Gujarat and maharate in India were not strong enough, and the proportion of high quality S-6 and J34 decreased significantly. In 2018, the quality of Texas cotton was not satisfactory, so the phenomenon of mismatch between demand and supply was very prominent.

The two is India's MSP or at least 10% increase in 2019.

According to relevant reports, in order to expand cotton planting area, increase domestic effective supply and maintain farmers' income, India's government continued to raise MSP is a big probability event. A direct result is the inverted price of cotton inside and outside India.

Three, since the Sino US trade war began in July 2018, India's textile and garment industry has benefited greatly.

Not only the large number of orders from developed countries such as the United States, the European Union, Japan and Korea will pfer to Southeast Asia and India, but if the US government impose tariffs on the remaining 325 billion US dollars imported from China (about 40 billion dollars in textiles and clothing), then cotton consumption and export of gauze clothing will be blowout in India, Vietnam, Bangladesh and Indonesia.

Four, the appreciation of the India rupee exchange rate is conducive to the import of cotton and other bulk commodities.

For Moody's ruling India people's party, a strong currency is in line with the nation's strong imagination of the motherland. Therefore, the industry analysis shows that with the victory of India's election, Modi's easy victory, the fall in international oil prices, and the danger of India's current account deficit have weakened. This round of rupee appreciation is long-term.

According to India media reports, due to the low domestic cotton inventory and relatively stable cotton prices, the cotton planting area in India is expected to grow by 7-8% this year.

At present, the rapid development of sowing in the northern part of India will also increase in other areas.

According to cotton seed distributors, Rajasthan cotton sales in northern India this year increased by 10% over the same period last year. Experts predict that the sown area in India will grow by 7-8%.

According to the analysis of India cotton trading company, the end of this year's cotton inventory in India is around 2 million packs, the lowest level in ten years.

The India Cotton Association expects cotton production to be 31 million 500 thousand packs in 2018/19, much lower than previously expected.

Experts believe that although the cotton prices in the coming months are expected to remain stable, the Sino US trade war may bring significant fluctuations to the global cotton market.