Is India Cotton Cheap To Kill Cotton Price To Be Dragged Down?

Long before the outbreak of the new crown pneumonia epidemic, the international market has been vigilant against the acquisition of CCI in India. No matter how much they are collected, they will enter the market sooner or later, whether in India or in the international market.

Now, the epidemic is far from over, and cotton in India is starting to get excited.

Due to the impact of the epidemic and the blockade, the low grade cotton in the cotton growers of India could not be sold, and the quality of cotton began to decrease as the storage time lasted for a long time, and the demand for domestic cotton mills in India was also significantly reduced. With the continuous listing of cotton in 2019, cotton growers will pile more cotton in their hands. If they can not export as quickly as possible, the pressure of sales will increase.

In this year, India CCI basically acquired high grade cotton, and private cotton ginning plants sell basically low grade cotton. The export quotations of these cotton are very low, and the quantity is considerable. Last week, Chinese traders began to quote a large number of India low grade cotton quotations at super low prices, which is 1000-1500 lower than those of American cotton, Brazil cotton and West African cotton.

At this stage, there are no buyers of low grade India cotton in the Chinese market, and whether it will bring any impact to the traders in the bonded area with large quantities of cotton and spot goods also need to be observed. Over the past six months, traders' bonded cotton quotations have been quite strong, but the inventory pressure has exceeded $1 billion. Under the present circumstances, this is not a small number. India cotton has attracted some buyers at such a low price to enter the international market. Bangladesh and some other regions have a very active demand for India cotton.

At present, India Cotton Traders' S-6 SM 1-5/32 quotations are the +100/150 points of July contract, even considering the quality, which is also much lower than the other producing areas. It is a big question whether the cash strapped mills can continue to purchase cotton, Brazil cotton and West African cotton whose price is 1200-1400 points higher. The figure below shows that the base of India cotton is far lower than that of other varieties.

With the continuous listing of cotton in India, there is a further downward trend in domestic cotton prices. Moreover, CCI is selling cotton stocks at a low price, and the price of 10000 or more rupees / Kant for purchasing more than 10 thousand packages is equivalent to 23.57 cents / pound. At present, the price of S-6 1-1/8 in private transactions in India has dropped to 55.20 cents / pound, hitting a new low this year, while the psychological price of Cotton Traders has even dropped to 50.50 cents / pound.

Recently, India's cotton market has increased to more than 30 thousand bags a day. CCI has been very active after the re opening of the spot market, but with the continuous increase in the number of cotton stocks, the cash flow is becoming more and more intense. While CCI only purchases high-grade cotton (Grade 1), it also brings downward pressure on low grade cotton.