According to USDA’s December supply and demand report, India’s cotton production in 2016/17 is estimated at 27 million bales (November estimate was 27 million bales), an increase of 600,000 bales from 2015/16; 9 of the Cotton Advisory Council of India (CAI) Monthly forecasts show that India’s cotton output in 2016/17 is 5.712 million tons; recently, some international cotton merchants and Indian ginning companies believe that India’s cotton output in 2016/17 may exceed 5.9 million tons.
Judging from the survey, India’s new monetary policy has had a “continuous” impact on the purchase, processing and sales of seed cotton, the continued strength of the US dollar index has caused large fluctuations in the rupee exchange rate, and India’s textile and apparel exports to the European and American markets have been sluggish (the euro zone debt crisis has intensified) , both domestic cotton consumption and contracted exports of Indian cotton in 2016/17 are “less optimistic” than the previous two years.
With the delay in the launch of Indian cotton, the “four-country killing” phenomenon of US cotton, Indian cotton, Australian cotton and Uzbekistan cotton will become more intense in the first half of 2017. As the impact of cost and monetary policies on Indian cotton gradually dilutes, the price advantage of Indian cotton will be fully apparent, and “running the second half” will also be the goal of Indian ginners and exporters.
1. The price advantage cannot be replaced. Buyers from Pakistan, Bangladesh, Indonesia, and China are once again focusing on Indian cotton.
Since December, with the gradual launch of Indian seed cotton, lint cotton and export pressure, India’s domestic cotton prices have fluctuated downwards and bottomed out. The ex-factory price of S-6 ginners has dropped to 71-72 cents/pound. The competitiveness of Indian cotton yarn and gray fabrics Continuously strengthen. The current CIF quotations of the Far East main port for the January and February shipping schedules of S-6 1-5/32〞, S-6 1-1/8〞 and MCU5 (30mm) are 77 cents/pound and 76.6 cents/pound respectively. And 77.80 cents/pound, lower than 7-8 cents/pound of EMOT GC grade cotton in the same shipping period; the quotation of S-6 in January/February is also lower than 1-1/8″ West African cotton (Mali, Burki) Nafaso, Ivory Coast, etc.) 4.5-5.5 cents/pound; as Pakistan lifted the “ban” on Indian cotton imports, Pakistani textile mills became more enthusiastic about purchasing, and defaults on US cotton increased.
2. The U.S. cotton export contract is “outstanding”, leaving limited space for cotton mills and operators in China, Pakistan, Vietnam and Bangladesh.
According to USDA statistics, as of December 8, U.S. cotton exports totaled 1.81 million tons in 2016/17, a year-on-year increase of 692,000 tons, or 62%, completing 67% of USDA’s export forecast, significantly higher than the 55% in the same period last year. , which means that in the first half of 2017, the hope of signing high-grade and high-quality U.S. cotton directly from ginners and exporters has been greatly reduced (mainly mid- to late-season cotton), and the main body of cotton resources has been transferred to foreign companies and large cotton traders. Second-hand or even third-hand” sources of goods occupy the consumer market. The earliest shipping date for Australian cotton in 2017 is April/May. From January to April, “primary” supplies from other origins except Indian cotton are “out of schedule” for China and other Southeast Asian countries.
3. The hot sales of low- and medium-count cotton yarns in India, Pakistan and other producing areas have given strong consumption support to Indian cotton.
For cloth factories, garment factories and trading companies in countries such as China, South Korea, Japan, Europe and the United States, they need not only “Yangchun Baixue” with 50S and above high-quality, combed yarn, but also “Xiaolibaren” with C32S and below count (including OE yarn). “. From the perspective of spinning mills, the demand and consumption of C40S and below yarns are still the mainstream of the market, while spinning mills in India, Pakistan, Vietnam, Indonesia and other countries are in a state of “rapid development and staking out land”. Dependence on high-quality but affordable Indian cotton continues to be high.
According to Chinese customs statistics, China’s import volume of Indian cotton yarn increased significantly in October 2016, especially at Qingdao Port, and the import volume is expected to increase in November; due to the abolition of the TPP agreement, Vietnam no longer enjoys tariff-free access to the United States. Market preferences and the need to comply with TPP rules of origin. Therefore, Vietnam’s imports of cotton and cotton yarn from India have increased. According to estimates by some cotton yarn traders, as of late December, the inventory of imported cotton yarn in my country’s main ports has exceeded 90,000 tons.
4. The Indian rupee depreciates more against the US dollar, which is beneficial to the export of cotton and cotton yarn.
Some investment institutions and futures companies believe that the U.S. dollar index reached a high of 125 in January 1986 and reached a second high (120) in 2001. There is a cycle between these two highs. This cycle lasts for 15 years. Therefore, the U.S. dollar exchange rate has now reached 102 and 103, rising from the bottom. Therefore, the U.S. dollar index is expected to touch 120 in 2017, which will greatly promote Indian cotton exports on the premise of greatly suppressing the export of U.S. cotton, Australian cotton, etc.
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