Indian farmers release stocks and cotton prices plummet
Foreign news on May 24, Indian cotton prices fell nearly 9% in the past 2 weeks, as cotton growers began to ship the cotton they had kept in the past few months to the Agricultural Products Marketing Committee (APMC).
“Farmers in various states have changed their minds and are looking to sell their stockpile of seed cotton. Cotton imports hit a record high in May and are expected to continue till end-June,” said Anand Popat, a cotton, yarn, cotton waste trader from Rajkot. "
"Daily arrivals of cotton have increased to 100,000 bales (170 kg/bale) in the past few days. Yarn demand is negligible and exports are affected by the recessionary trend. Demand for fabrics is also weak."
So far this month, cotton arrivals have hit a nine-year high of 182,572.67 tons (1.073 million bales), according to data provided by Agmarknet, a branch of India's agriculture ministry. In 2014, India's cotton production reached a record high of 39.8 million bales, and the arrival of cotton in the same period was 236,800.48 tons (1.393 million bales).
"The daily arrivals of seed cotton ranged from 90,000 to 110,000 bales last week, totaling 700,000 bales," Popat said.
"Panic hit the market. There is no demand for yarn and fabric. No one is buying cotton. Production seems to be oversupplied," said yarn processor Sachin Jhanwar.
"Cotton prices are slowing down in line with the same trend due to continued low demand across the value chain," said Prabhu Dhamodharan, convener of the Indian Textile Entrepreneurs Federation (ITF).
On India's MultiCommodity Exchange, the June cotton contract is currently trading at Rs 58,120 per kandi.
Cotton growers are storing cotton in backyards and terraces this year in the hope of higher prices.
Growers in Karnataka and Maharashtra stopped their produce for the first time, and farmers in Gujarat stopped producing produce during the off-season, which usually starts in April.
Dhamodharan said: "Throughout the value chain, mill capacity utilization levels are low. Thereafter cotton prices will be in line with real demand factors such as garment exports."
The Cotton Production and Consumption Council, a body comprising all stakeholders, estimates cotton production for the current season (October 2022-September 2023) at 32.723 million bales, but some traders expect more than 34 million bales.
However, in its latest estimate this month, the Cotton Association of India, a trader group, expects cotton production to fall below 30 million bales.
“Things are looking good for the trading houses who sold in the forward market and are now covering their positions. Lower prices are also good for them,” Popat said.
"In the next three months, we could see some cotton imports from Australia, Brazil, the US," DasBoob said.