According to feedback from some private cotton processing enterprises in the central cotton region of India, the purchase price of seed cotton in Gujarat and Maharashtra has exceeded 7,500 rupees/quintal (equivalent to 105.25 cents/pound) since early October, which is higher than that in India. The MSP price of medium-fiber length cotton is nearly 1,800 rupees/quintal (the MSP in 2021/22 is 5,726 rupees/quintal); seed cotton has been harvested and sold in the northern cotton region of Punjab in late September, and the current seed cotton purchase price has risen to 7,200 -7,300 rupees/quintal (an increase of more than 200 rupees/quintal from the initial scale opening), which is also significantly higher than the MSP purchase price.
A private cotton company in Gujarat stated that as of early September, CCI cotton inventory had been less than 500,000 bales (hurricane Gulab brought heavy rains and low temperatures, which led to cotton harvesting and processing in India. Encountering resistance, CCI cotton inventory sales and shipments surged); and the sharp increase in fertilizer, pesticide and labor costs in 2021 has significantly increased farmers’ expectations for the selling price of seed cotton. In addition, the Indian government has not canceled import restrictions. The plan to impose a 10% tariff on cotton makes it reasonable for the purchase price of Indian seed cotton to soar year-on-year in 2021/22.
A medium-sized cotton trader in India has serious concerns about cotton exports in 2021/22. On the one hand, the basis difference of Indian cotton cargo and bonded cotton has continued to rise recently. The gap between cotton, Brazilian cotton and US cotton has narrowed. For example, on October 11-12, the basis difference of bonded M 1-5/32 Indian cotton in various Chinese main ports was 5.5-6.5 cents/pound, while the basis difference of M 1-5/32 Brazilian cotton was only 10.75-11.75 cents/pound. pounds; on the other hand, as tensions between China and the United States have eased, Chinese buyers have increased their efforts to contract and purchase U.S. cotton in 2021/22, and accordingly their attention and orders for Indian cotton have weakened; while the Pakistani government hopes to lift import restrictions on Indian cotton. Vietnam’s cotton textile industry has fallen into the “dire straits” of the epidemic again, so cotton companies are worried about weakening export momentum. However, considering that the weather in Gujarat will be relatively good in 2021/22, the yield and quality indicators of S-6 are expected to be relatively ideal, which will be highly attractive to cotton companies in China, Indonesia, Vietnam and other countries. Therefore, private ginning mills in Gupang are rushing to harvest. The atmosphere is heavy. </p
