Flash: Indian cotton prices expected to see a fall in 2023

With domestic cotton prices in India falling to Rs 61,000 per kande and a significant drop in the premium to ICE futures, demand for Indian cotton exports has started to recover. According to the Gujarat State Trade Association, the price of S-6 had fallen to Rs 61,550 per khand on 25 January.

 

Karnataka cotton traders said that there has been a small export of Indian cotton and import demand from Bangladesh following the fall in domestic cotton prices. At the current price level, Bangladesh is the only buyer. In recent months, Indian cotton prices have been significantly higher due to Indian cotton farmers holding cotton to sell up, and there has been no import demand from China. If Indian cotton prices continue to fall, cotton farmers may not sell as they did earlier in the year. Currently, most seed cotton is being traded at Rs 7,500-8,200 per quintal across India, compared to the current year's MSP of Rs 6,080 per quintal.
 

 

An Indian trader said that the Indian cotton price premium to ICE has fallen from almost 15 cents to just over 10 cents, which will lead to a gradual recovery in export demand. Sources said that India has now exported 200,000 bales for shipment and that shipments will continue to increase in the latter part of the year. The Indian Cotton Association expects Indian cotton exports to be 3 million bales this year, down from 4.3 million bales in the previous year, compared to the USDA's forecast of 4 million bales.

 

Currently, domestic demand for yarn in India is beginning to recover and as prices stabilise, yarn mills are beginning to increase their raw material purchases and will begin to replenish their raw material stocks over the next 2-3 months. The Indian Textile Federation said that based on the current supply and demand situation, Indian cotton prices are expected to remain broadly stable at current levels. As demand remains under pressure, price fluctuations will not be significant this year. Considering the increase in Indian cotton production this year and the lack of demand, Indian cotton prices are expected to decline in the near future.