India's new cotton market is increasing, and the actual output may exceed expectations.

According to AGM statistics, as of March 26th, the cumulative listing volume of Indian cotton in 2022/23 was 2,931,700 tons, which was much lower than that of last year (the average reduction rate was still more than 30% compared with the three-year listing progress), but it should be noted that the listing volume in the week of March 6th-12th, March 13th-19th and March 20th-26th reached 7.

According to the latest report of CAI in India, India's cotton production in 2022/23 was reduced to 31.3 million bales (30.75 million bales in 2021/22), which was nearly 5 million bales lower than the initial forecast of the year. Some organizations, international cotton merchants and private processing enterprises in India still think that the data is a little high and still need to be squeezed. The actual output may be 30-30.5 million bales, which is 250,000-500,000 bales less than that in 2021/22. The author's view is that there is little probability that India's cotton output will be less than 31 million bales in 2022/23, and CAI's forecast is basically in place, so it is not appropriate to be too bearish and watch out for "going too far".

On the one hand, since the end of February, the domestic spot quotations of S-6, J34 and MCU5 in India have fluctuated downward, and the delivery price of seed cotton has dropped, and farmers' reluctance to sell has once again warmed up. For example, the purchase price of seed cotton in Andhra Pradesh has recently dropped to 7260 rupees/burden, and the local listing progress is extremely slow. The number of cotton for sale in the hands of cotton farmers exceeds 30,000 tons; However, it is also very common for farmers in central cotton areas such as Gujarat and Maharashtra to hold goods for sale (reluctant to sell for many months), and the daily purchase volume of processing enterprises can not maintain the production needs of the workshop.

On the other hand, in 2022, the growth trend of cotton planting area in India is obvious, and the unit yield is flat or even slightly increased year-on-year. There is no reason for the total output to be lower than last year. According to related reports, the cotton planting area in India increased by 6.8% in 2022, reaching 12.569 million hectares (the planting area in 2021 was 11.768 million hectares). Although it was lower than the 13.3-13.5 million hectares predicted by CAI in late June, it still showed a significant year-on-year increase. Moreover, from the feedback of farmers and processing enterprises in the central and southern cotton areas, the yield increased slightly (the long-term rainfall in September/October in the northern cotton area led to the decline of new cotton quality and yield).