1. Commodity News

Cotton Markets Likely to Remain Strong This Month

Cotton has maintained the upside rally during the month of March and it is hoped that the demand for India’s cotton products in the near term will be robust from the global economic rebound. More there are chances of a significant reduction in the ending inventory.

Abhijeet Banerjee
Cotton
Cotton Crop

Cotton has maintained the upside rally during the month of March and it is hoped that the demand for India’s cotton products in the near term will be robust from the global economic rebound. More there are chances of a significant reduction in the ending inventory.  

The arrivals are not increasing which implies that most of the stockists and growers prefer holding their stocks so as to get the advantage of further rise in the price levels. Strength in the global cotton fiber market has been the other key positive driver for cotton seed as well as cotton fiber prices.

There are indications regarding a higher need for cottonseed for crushing purposes. The price view for the edible oil complex remains strong.  The availability in the market is less due to reducing arrivals of raw cotton (due to the seasonality aspect) and limiting cottonseed inventory lying with the ginners.  Therefore, one can also expect cotton wash oil prices to continue with the firm trend.

Cotton cake prices are maintaining average prices above 3000 these days. Prices were below the 2000 mark during April 2021. As soy meal prices have turned expensive, most of the industry persons are of the view that consumption of cotton cake may shift towards mixing in the animal feed rations in the longer run. As a result, the possibility of cotton cake prices surpassing the 3500 mark has increased from a broader perspective.  

The February 2022 upland farm price of US cotton had reached a record 100   cents per pound. The Month-to-month changes in the global 2021/22 cotton estimates (as understood from the latest USDA release) are small, with higher production and lower consumption resulting in an 800,000-bale increase in ending stocks, to 83.4 million bales. On the other hand, the CAI Crop Committee has estimated the total cotton supply till the end of the cotton season 2021-22 i.e. upto 30th September 2022 at 425.13 lakh bales of 170 kgs. each (equivalent to 451.70 lakh running bales of 160 kgs each) which is less by 8 lakh bales compared to 433.13 lakh bales of 170  kgs each (equivalent to 460.20 lakh running bales of 160 kgs each) estimated by the CAI previously.

The carry-over stock which was earlier estimated at 48.13 lakh bales is now estimated at 40.13 lakh bales of 170 kgs each (equivalent to 42.64 lakh running bales of 160 kgs each). 

The previous year’s stock was estimated by CAI at 75 lakh bales of 170 kgs each. The CAI has retained its consumption estimate for the current crop year 2021-22 at 340 lakh bales of 170 kgs each (equivalent to 361.25 lakh  running bales of 160 kgs each. The previous year’s consumption estimate was 335 lakh bales of 170 kgs each. Therefore the demand-supply factors remain in favor of the upward trend for cotton prices.

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