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Three Factors "Behind The Scenes" Of Cotton Price Rising In India

2021/8/12 15:32:00 0

Since 2021, cotton prices in India have continued to rise. Take S-6 ginning plant in Gujarat as an example, its quotation has increased from 43300 rupees per Kandi to 57000 rupees per Kandi. In July alone, the price rise was even more rapid. Among them, the bottom selling price of higher grade reserve cotton of CCI increased from nearly 50000 rupees / Kandi at the beginning of July for several times, and it had been raised by 3000 to 53000 rupees by the end of July. On the whole, India's cotton prices are rising, mainly due to three reasons, namely, the shortage of inventory, strong market demand, and the imposition of import tax. This sharp rise in cotton prices not only broke the stability of the industry, but also caused a sharp decline in the competitiveness of Indian cotton exports.

According to CCI statistics, there are only 153000 tons of reserve cotton inventory, among which the remaining stock of last year was about 1.96 million tons. This year, the cumulative purchase of about 1.56 million tons. After continuous auction and storage and the international market's continued enthusiasm for India's reserve cotton procurement in recent months, CCI's inventory continued to decline, and the reserve price continued to rise.

According to the data of the Ministry of agriculture of India, as of August 5, the sown area of cotton in India has reached 11.6172 million hectares, an increase of 540000 hectares compared with the previous week, and the planting progress is 90.1% (compared with the final sown area of 12.9 million hectares in the previous year), and the planting area is still 6% behind the previous year. This year's cotton price rise did not lead to the expansion of cotton planting area, some cotton farmers chose to switch to soybean. At present, the cotton planting work in India is still in progress, and the network will continue to pay attention to the area change in the later period.

From the perspective of India's domestic policies, since January 1 this year, India began to impose a 10% tariff on imported cotton, which undoubtedly increased the cost of its domestic enterprises using imported cotton, and more enterprises chose to use domestic cotton, which further pushed up the price of Indian cotton. However, for the enterprises using high-grade cotton, especially long staple cotton, there is a structural demand for imported cotton, which undoubtedly leads to these enterprises have to face the dilemma of high production cost.

In addition to the above-mentioned domestic situation in India, we can see that affected by the drought in Texas, the main cotton producing area, the cotton production in the United States decreased sharply in 20 / 21. The tight balance of cotton supply and demand in the United States forms a strong support for the international cotton price operation, and then supports the Indian cotton price operation.