Global Perspective: India'S New Cotton Listing Progress Is Lower Than Expected, The Price Continues To Be High

According to the report of the agricultural counsellor of the United States, India will plant 12.8 million hectares of cotton in 2022 / 23, and the output is expected to be 27.7 million bales (480 pounds per pack). Cotton yield is expected to increase by 3% due to higher than normal rainfall.

As of August 31, 2022, India's cotton market in 2021 / 22 reached 24.36 million bales. According to the prediction of the Indian cotton production and consumption Committee, the cotton market volume reached 99% of the output, which was 5-6% lower than expected. The reason for the slow cotton listing was that cotton farmers were reluctant to sell cotton and expected the price to rise.

In 2022 / 23, India's cotton market is likely to repeat the situation of the previous year. Cotton harvest delay and rising price will cause cotton farmers to reduce sales volume. Therefore, Indian cotton price is unlikely to be lower than the minimum support price of MSP. Another reason for the delay of cotton listing in India in the new year is that the demand for cottonseed oil may return to the strong situation in the previous year, leading to cotton farmers' hoarding of cottonseed. Last year, cotton seed and cotton prices rose simultaneously in India, and from January to may 2022, cottonseed prices in Gujarat, India, soared by 24%.

According to the report, India's cotton consumption in 2022 / 23 will be 26.5 million bales. High domestic cotton prices may prompt textile mills to reduce the use of cotton and increase the use of chemical fibers. India's cotton export volume is expected to be 4 million bales. Although the increase in output will increase the export supply, there are limited cotton buyers in India, and the price of Indian cotton is significantly higher than the cotruk a index, so the export demand will remain low.

According to the report, India's cotton price will fall from its historical high in 2022 / 23. The drop of oil price, the improvement of transportation and port delay and the 40% drop of container price will promote textile export and help to increase the cotton consumption of India in the second half of 2022 / 23.