Jumping up and down Confusing Indian cotton cultivation/consumption is difficult to distinguish between true and false

What are the recent focus of the international market, it is obvious that the Russian-Ukrainian war, the extreme sanctions and counter-sanctions imposed by Europe and the United States on Russia, the interlocking oil tankers between Iran and Greece, the official announcement by US President Biden to launch the "Indo-Pacific Economic Framework", the sharp fluctuations in crude oil and natural gas, etc. are all counted, but the recent movements and voices made by our neighbor India are not small, causing the international market to look at each other sideways.

For example, on May 13, India's Ministry of Commerce and Industry suddenly announced a ban on wheat exports from now on the grounds of ensuring domestic food security; on June 1, it announced that in order to ensure the supply and price stability of domestic sugar, the total export limit of domestic sugar (including raw sugar, refined sugar and white sugar) will be imposed from now on, and the total export volume of the 2021-2022 crushing season (October 2021 to September 2022) will be limited to 10 million tons. India's wheat and sugar export control policies have come very suddenly, leaving global buyers confused and hurt, and since February 24 this year, India has received 34 million barrels of discounted Russian oil. Russia has supplied india with more than 24 million barrels of oil in May, up from 7.2 million barrels in April and 3 million barrels in March, the data showed.

In June, Russia will supply about 28 million barrels of oil to India. Russia Today (RT) noted that last year, Russia exported an average of 960,000 barrels of oil per month to India, while this month's exports are about 25 times that number. India is becoming an important part of the global agricultural products, trade and economy.

Of course, the Indian government's speculation on cotton in 2021/22 and 2022/23 has not stopped for a moment, in addition to the record high domestic cotton prices in India in 2021/22, the output and planting area have become a "confused account", and it is difficult to distinguish between true and false.

First, the Indian Cotton Association will reduce the output of Indian cotton in 2021/22 to 32.363 million bales (170 kg per bale, equivalent to 5.50171 million tons) in mid-May, and will be lowered in recent days (it is already the fifth time that CAI has lowered cotton production this year, and the first four adjustments are 1.2 million bales, 800,000 bales, 500,000 bales and 1.15 million bales respectively, which shows how inaccurate and unreliable the statistics and forecasts of cotton production by the Indian government department are). According to the feedback from private cotton enterprises in Gujarat, Madhya Pradesh and Punjab, the total cotton production released by CAI in 2021/22 has dropped to less than 32 million bales, and 31-32 million bales is a relatively accepted data for all parties, so cai has almost no room for downward adjustment in the later period.

Second, private surveys show that India's cotton planting area in 2022/23 may exceed 13 million hectares, an increase higher than the previous CAI and CCI forecasts. Why is the area of cotton grown in India so much? In addition to the southwest monsoon or early registration, which triggered a comprehensive rebound in the planting area of the central cotton area, the cotton planting area of the northern cotton region of Punjab and Trengana may increase by more than 26% and 55% in 2022/23. Although the early heat and drought were high and the sowing was delayed, it did not affect the confidence and enthusiasm of farmers to expand the cotton planting area. According to reports, due to the high enthusiasm of farmers to plant cotton in 2022, the supply of BT cotton seeds in some areas is insufficient, and some farmers have even bought fake seeds and low-yield cotton seeds.

The hype of India's cotton policy in 2022 is also very enthusiastic and in full swing. First, will the Indian government consider extending the period for duty-free imports of cotton? This issue has been hyped up for more than a month, but there is no clear news at the moment. The Southern Indian Textile Association said in a statement that cotton prices had risen to Rs 115,000 in recent months from Rs 75,000 per candy in January 2022. At the same time, yarn prices also rose from Rs 328 to Rs 399, resulting in textile mills losing Rs 50-60 per kilogram; the Tamil Nadu Textile Association and other locals reported that the average price of cotton was Rs 3.5 lakh in October 2020 and rose to Rs 55,000 by the start of the new cotton year in October 2021. Prices peaked at Rs.80k on 31st December 2021 and Rs.115m in May 2022. Constantly refreshing the record high domestic cotton prices, so that the Indian spinning mills, textile associations and other calls for the extension or even permanent cancellation of tariffs on imported cotton, india's minister of textiles asked the authorities to quickly decide to delay the exemption of cotton tariffs, but there is no response from the Modi government.

Secondly, what is the current operating rate and order acceptance of India's cotton textile industry? The author believes that it is difficult to distinguish between true and false, but recently some textile and clothing enterprises in Indonesia, Bangladesh, Vietnam and other countries have reported that some Indian orders have shifted to other countries, indicating that the Indian Khmer price has a greater impact on enterprises to receive orders, arrange orders and produce. The Association of Spinning Mills in Southern India announced the closure of its factories.

The chairman of the association said that the price of cotton in India rose by as much as 53% year-on-year this year, but the price of yarn rose by only 21%, and the spinning mills had to take the extreme approach of stopping production because they could not afford huge losses. Spinning mills in Gujarat, India's largest cotton-producing state, have now reduced their production by nearly half and could close at any time. The chairman of the state spinning mills association said that since the beginning of May, local yarn manufacturers have not received any new orders due to high prices, and if cotton prices remain high, most spinning companies will be forced to close operations due to losses. At present, nearly 120 spinning mills in Gujarat only maintain a little more than 50% of the production capacity, and garment companies have also reduced production by about 45%; spinning mills in northern India are also reducing the output of cotton yarn, and the current reduction is between 20% and 50%, and some enterprises have plans to stop production;

Third, does India ban the export of cotton yarn? The Indian government is under increasing pressure to intervene in the cotton market, and garment factories and spinning mills are constantly asking the government to ban cotton exports. The Indian Garment Export Promotion Council (AEPC) recently said that if India cannot control the rising price of cotton and cotton yarn, it may affect the realization of clothing export targets this fiscal year and cause a large number of small and medium-sized enterprises to encounter liquidity risks.

Market analysts pointed out that with the arrival of the southwest monsoon rains next month, the large-scale sowing of cotton is about to begin, if the recent ban on exports, it will trigger their concerns about the sharp decline in cotton prices in the new year before sowing, which may lead to a decline in sown area and yield, which will eventually lead to damage to the interests of the textile industry; and the implementation of a ban on Indian cotton yarn exports is less feasible, although the supply of cotton yarn has declined due to the suspension of production cuts by some textile enterprises in southern India, and some clothing exporters have called for a ban on cotton yarn exports. But India's minister of commerce, industry and textiles said government intervention in the market should not be pushed because of the potential long-term impact on the cotton value chain, meaning the government may not support a ban on cotton yarn exports or any other related measures.

However, according to the current FOB and CNF quotations of Indian cotton yarn and taking into account quality indicators, cost performance and other factors, even if the Indian government implements the ban on the export of cotton and cotton yarn, the impact on the actual market is not large. It is understood that as of now, Guangdong, Jiangsu and Zhejiang and other markets C32 high with whitewash (large factories, brands) Indian cotton after customs clearance cost and domestic cotton yarn "upside down" range of 4000-5000 yuan / ton (according to the CNF quotation calculation, non-customs clearance cotton yarn spot price), India, Pakistan, Vietnam cotton yarn cargo / bonded yarn competitiveness is weak, export ban or liberalization will not change buyers to hold the currency to sell, wait and see attitude.

Recently, many parts of India and Pakistan have been engulfed in record heat. Experts quantifying the impact of global warming on extreme weather events say in a new report that global climate change has increased the likelihood of a harsh heat wave like the one that swept through India and Pakistan in March and April by 30 times. Not just in South Asia, but also in many parts of the world, it is currently experiencing extreme heat weather. Outside of Asia, many parts of the southern and western United States, europe, are shrouded in hot weather and will enter the hottest spring and summer on record. Therefore, the growth and yield impact on cotton, corn, wheat and other crops is gradually expanding, and the speculation of funds will also follow, so the speculation of prices and supplies of cotton, grain and so on will continue, and India will naturally also frequently produce "moths", and the market is facing large fluctuations.

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