Market Observation: It Is Difficult To Make A Deal "Upside Down" Without Buyers' Prices

China Cotton News: As India's cotton planting enters the late stage in 2024 (the planting in Maharashtra, Gujarat, Madhya Pradesh, etc. in the central cotton region is nearing the end), the forecast data on India's cotton output, import and export volume, ending inventory, etc. in 2024/25 have been released successively. According to the latest report of USDA, India's cotton output, import and export in 2024/25 will be 5.443 million tons (India's cotton output in the previous year was 5.528 million tons), 327000 tons and 327000 tons (the import and export volume is equal); According to the analysis of foreign research institutions, the cotton planting area in India in 2024/25 is expected to be 12.3 million hectares, 3% less than the prediction of domestic institutions in India last year, and the output is expected to be 32.2 million bales (about 5.474 million tons), which is not much different from the prediction data of USDA.

The export volume of Indian cotton in 2024/25 is only 327000 tons (USDA report data), and most Indian private cotton processing enterprises and international cotton merchants are skeptical. They believe that the actual export volume is expected to exceed 450000 tons or even 500000 tons. The main reasons for the low forecast of USDA, ICAC, CAI and other institutions are as follows:

On the one hand, with ICE cotton futures falling below 70 cents/pound and 68 cents/pound, the "cost performance" of American cotton, Brazilian cotton and African cotton is significantly higher than that of Indian cotton, and the contracted imports of cotton mills and traders will grow rapidly. Since the first ten days of August, the domestic price of S-6 cotton in India has been about 57100 rupees/kandi (87 cents/pound), a small increase of 0.14 cents/pound compared with the previous week; Although CCI lowered the base price of S-6 round by 200 rupees/kandi, it still reached 56300 rupees/kandi (about 85.79 cents/pound), which was higher than the cost of foreign cotton after customs clearance;

On the other hand, India's cotton planting area will decline to a certain extent in 2024/25, and the output is expected to be very pessimistic. The supply pressure may increase, and imports are needed to fill the gap. According to the data of the Ministry of Agriculture of India, as of August 1, the cotton planting area of India in the new year had reached 10.8 million hectares (162 million hectares), a decrease of about 9% compared with the same period last year. At present, the planting progress has only reached 83% of the agricultural department's target of 12.993 million hectares (this year, the southwest monsoon landed ahead of schedule, and all cotton regions have sufficient rainfall, but the cotton planting progress is very slow).

Moreover, the difficulty of CCI cotton inventory rotation continues to increase, and the supply cannot be effectively increased in the short term. According to statistics, as of the end of July, CCI had 355800 tons of surplus cotton stocks. Recently, India Cotton Company (CCI) continued to suspend the release of daily sales and inventory data due to the lack of buyers and the "upside down" of domestic and foreign cotton prices. Although Indian cotton company lowered the base price of S-6 to 56300 rupees/kandi (about 85.79 cents/pound), it still lacks competitiveness and is difficult to sell.