High export shipments from the US, limited improvement in Indian cotton arrivals and an increase in Pakistan’s cotton production fuelled international cotton prices to a new high during the Spring Festival holiday. However, the celebrations didn’t last long as the Zhengzhou cotton futures market rose limitedly on the first trading day with domestic cotton market weaker than foreign market.

US cotton exports rise 18.3 per cent

As per CCF Group analysis by January 27, 2022, inspection volumes of the US upland cotton grew by 18.3 per cent year-on-year to 3.5771 million ton, show USDA stats. The inspection volumes of upland cotton and Pima increased by 16.7 per cent year-on-year to 3.6466 million tonne, about 95.1 per cent of the forecast production. The proportion of the upland cotton tenderable against ICE futures amounted increased by 8.1 percentage point year-on-year to 83.5 per cent for the marketing year.

Since January, the promotion of upload tenderable against ICE futures has remained high. Weekly exports have also rose due to sustained production and quality. By the week ending January 27, upland cotton exports for 2021-22 declined 15.1 per cent from previous week while they increased 10 per cent from prior four-week average. Cumulative exports declined 6.1 per cent year-on-year to 2.7195 million tons. Weekly exports increased by 52.7 per cent to 68.5000 tons from previous week and by 80.8 per cent from prior 4-week average. Total export shipments declined 41.9 per cent year-on-year to 885.2000 tons. Exports of upland cotton and Prima surged by 86 per cent to 2.809 tons during 2020/21 while total cotton exports surged by 33 per cent to 926,000 tons. The rise in weekly exports was mainly attributed to the stimulus from China, Pakistan and Vietnam. Exports from India also increased in January 2021.

India’s cotton production to reach 5.67 million tons

According to AGM, by February 5, weekly Indian cotton exports increased by 93,000 tons to 200,000 tons from the same period of last year and by 26,000 tons from the prior 3-year average. Total cotton exports increased by 780,000 tons to 3.27 million tons, up 780,000 tons from the same period of last year.

Currently, about 66-72 per cent of Indian cotton is expected to arrive in the market, though arrivals are expected to slow down later. India’s cotton production is expected to reach around 5.67 million tons this season.

End in arrivals from Pakistan boost spot cotton prices

Statistics from the Pakistan Cotton Ginners' Association (PCGA) show, new cotton arrivals increased 33.2 per cent year-on-year to reach 1.15 million tons on February 1, 2022. Textile Mills’ purchase increased 43.3 per cent year-on-year to 1.121. Currently, arrivals have ended and production has settled. This has led to an exponential rise in spot cotton prices while the prices of seed cotton show limited growth.

Cotton planting in Brazil improves

By the week ending January 29, the sowing progress of cotton crops in Brazil increased by 22 per cent from the same period of last year to reach 78.8 per cent. The current sowing progress is equal to that in 2019/20 season.

Overall, a surge in cotton exports from the US, improved arrivals of Indian cotton in the market and a minor rise in Pakistan’s cotton production led to international cotton prices hitting a new high during the Spring Festival holiday. Nevertheless, on the first trading day returning from the holiday, Global cotton production shows signs of growth in 2022/21. However, high cotton prices may drag down the consumption.