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Cotton Markets Trading Firm – Farmers Receive Good Returns

Abhijeet Banerjee
Abhijeet Banerjee
Cotton Markets
Cotton

International cotton futures continued trading with positive momentum following market expectation of yet another month of lower world cotton stock revision by USDA. Prices in markets of USA and India were firm during the week ended recently.

Export prospects of Indian cotton has increased once again as domestic prices are a huge discount from overseas cotton prices, which may increase the attractiveness of Indian cotton in the global market. Cotton (Kapas) at centres of Kadi and Rajkot had gained Rs.20-25 per 20 kgs over previous week.

This season has been quite favorable for the Indian farmers in getting good returns from their produce. As the near term price view is still upward, our growers can enhance their returns if they hold the remaining stocks for a month at least. The CCI continues procuring cotton from growers of Maharashtra and Gujarat regularly.

The 2020/21 U.S. cotton supply and demand forecasts show slightly higher exports and lower ending stocks relative to last month. The export forecast is raised 250,000 bales to 15.5 million based on a strong pace of shipments to date.

Ending stocks are now estimated at 4.3 million bales, The USDA projects the upland cotton marketing year average price received by producers at 68 cents per pound, unchanged from its January estimate. The 2020/21 world cotton forecasts include higher production, consumption, and imports, led by changes in China. World production is projected 1.3 million bales higher this month, with China’s forecast raised by 1.5 million bales as the daily rates of both ginning and inspections in Xinjiang continue to show late-season strength, which is an unusual price behavior.

Reports from China continue to suggest 2020/21 cotton area in Xinjiang was little changed from last year, but government classing data now indicates yields could be about 10 percent higher, while lower in Eastern China. India’s production estimate is reduced by 500,000 bales after considering the rising instances of pest infestation, while Pakistan’s production may be 200,000 bales higher and Australia 100,000 bales higher.

World consumption is projected 1.5 million bales higher this month, with China’s forecast 1.0 million bales higher reflecting growing domestic textile demand and exports. Consumption estimates for India, Pakistan, Bangladesh, and Turkey are raised slightly while the outlook this month is for lower consumption in Indonesia and Thailand. On the other hand world cotton trade is projected 350,000 bales higher than last month, with imports 500,000 bales higher for China. Global ending stock estimate is almost 600,000 bales lower versus previous month’s estimate, at 95.7 million bales, and 3.2 million bales lower than in 2019/20.

The latest USDA report has projected world’s cotton mill use in 2020/21 at 117.2 million bales, which is 14 percent above 2019/20.Similarly, China and India together are expected to account for more than 50 percent of the global cotton crop in 2020/21 World’s cotton production is projected at 114.1 million bales, which is 6.5 percent below 2019/20 and the lowest output in 4 years. Meanwhile, global cotton trade is projected to increase, with 2020/21 exports forecast to reach their highest since 2012/13 at 43.9 million bales.

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