In the past week, Indian cotton yarn prices finally stabilized after falling for several consecutive weeks. Cotton prices fell again due to the surge in production.
That week, the price of cotton yarn in India generally rose by 1-2 rupees/kg. After the price of cotton yarn fell sharply in the early stage, downstream textile companies began to increase their purchases of cotton yarn. As of now, cotton yarn prices are still down 14% year-on-year.
Affected by the year-on-year increase in new cotton production, Indian cotton prices continue to fall. The reason for the increase in cotton production this year is the substantial expansion of cotton planting, higher yields and abundant monsoon rains. The Indian Cotton Association predicts that India’s cotton production will increase by 13% year-on-year in 2019/20, which is consistent with the increase expected by the United States Department of Agriculture.
According to analysis, the government’s increase in the MSP purchase price has prompted the expansion of cotton planting area in India. However, due to the decline in cotton prices this year, cotton farmers’ income may be reduced. Therefore, the planting area and output next year will be reduced. There may be a significant reduction.
According to CAI forecasts, because Indian cotton prices are higher than the overall international cotton price level, it is difficult for Indian cotton exports to increase this year. However, industry organizations are currently lobbying the government to resume trade with Pakistan. Pakistan’s domestic import demand has increased significantly due to the sharp reduction in cotton production, and textile companies are importing large amounts of cotton from Brazil.
