Month: August 2015

CottonGuru’s Fortnightly Cotton Market Newsletter 10th August 2015

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Difficulty is like a bag full of cotton: Heavy for those who see it, & light for those who handle it.

INDIA Weather and Sowing:


Indian Council of Agricultural Research (ICAR) has opined that the pattern of rainfall and sowing area coverage is almost similar to that of 2013-14, which was a bumper crop year. The threat of drought is currently confined mainly to the contiguous stretch covering parts of central Maharashtra, north Karnataka and Telangana.


Cotton production in the Northern state of Haryana can fall by 30 % this year due to an attack by whiteflies. Whitefly is a pest that harms cotton crop in two ways – rendering plants weaker by sucking sap from its leaves and acting as carrier for Cotton Leaf Curl Virus (CLCuV), another organism that causes damages the crop. There are forecast of rain slow down after mid August.

Last year total sowing was about 12.9 million hectares and as on 30.07.2015, cotton sowing has been completed in about 10.3 million hectares.

Sowing: (as on date 07.08.2015)

State wise Sowing 2014-15

(Lac hectares)


(Lac hectares)

Punjab 4.50 4.40
Haryana 6.39 5.81
Rajasthan 4.15 3.49
Gujarat 28.20 25.00
Maharashtra 36.30 36.47
M. P. 5.70 5.42
Telangana 14.38 16.16
A. P. 4.78 5.98
Karnataka 6.24 4.07
Orissa 1.24 1.19
Tamil Nadu 0.05 0.03
U. P. 0.26 0.21
Other 0.50 0.00
Total 112.23 105.68

Domestic Market Summary:


Domestic market at present is bearish. Unless there is export demand prices will not be able to increase. They will settle at the MSP level. No ginner/ trader/ Mill will want to stock cotton.CCI will be compelled to buy cotton if this price trend continues.

China is importing less cotton. India’s cotton export to China was 6.1 million bales in the last season. It is 2.6 million bales in 2014-15 season, a fall of over 56%. The Textile Minister estimates exports at 7.1 million bales in the 12 months ending September from 11.79 million bales a year earlier. The trade circle feels that India’s exports will probably drop to 5.5 million bales which would be the lowest since 2008-2009. Over 5 million bales have been shipped so far this season.

The shippers from India to U.S and Australia are battling for market share in countries such as Bangladesh and Vietnam. Prices in New York slumped to a 5-year low in January amid global oversupply.

Cotton stockpiles in India are poised to jump to a record as exports plunge and a revival in monsoon rains boost crop prospects. The Cotton Association of India estimates that inventories will surge 25 % to 7.39 million bales by October from 5.89 million a year earlier.

CCI and private trade are keen to dispose their stock. CCI has no options but to reduce price to make its stock attractive and lower its inventory as it foresees another year of MSP buying as monsoon revives.

The silver lining for India is the rising demand from domestic textile mills. Consumption may increase 5 % in 2015-16 from about 32 million bales this year.


 Source: Tex. Commissioner, Cotton Outlook, CAI, Industry data


Spun yarn imports from India have rebounded in the month of June in China. The sudden rise in yarn exports can be attributed to relatively higher domestic prices in China compared to imported cotton. China, Bangladesh and Egypt are the 3 top importers accounting for more than half of spun yarn exported from India in June.

Domestic yarn market is not doing so well as a result of recurring problems in weaving and processing sectors. Mills focused on domestic trade are stuck up with a lot of inventory. Some of them have adopted the policy of closing down the production during the weekends.

Something Different:



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Exclusive Interview with Mr. B. K. Mishra, CMD, CCI


Q) What is your estimate about the total procurement and sales figures of CCI during the season 2014-15?

A: In 2008-09, the CCI had procured 8.9 million bales and this year it was 8.7 million bales because market prices were below the MSP in the initial part of the season. We are not very keen to conduct MSP operation every year. Market must be above MSP level ideally as it will be beneficial for trade.

The CCI has sold over 4 million bales and the current unsold stock is about 4.7 million bales.

Q) What will be unsold stock at end of the season 2014-15?

A:  Domestic requirement in the country is huge at 25 lakh bales. The CCI will continue to sell at current market prices. The CCI expects its unsold stock between 1.5-2 million bales and total closing stock of 5.5 to 6 million bales.

Q: What are your plans for exports considering that you are the biggest stock holder of cotton in India?

A: China has been the largest importer of Indian cotton over the last many years but China is not buying currently.CCI has started exporting to Bangladesh and is looking at other countries like Thailand and Vietnam for export. This year we have crossed 0.15 million bales till now which is a record figure from last 15 years. Exports could constitute 0.2-0.3 million bales of our total sales at the end of this season.

Q: What is estimation of final Indian crop this year for the season 2014-15?

A: The cotton crop was estimated at 39 million bales by the Cotton Advisory Board (CAB). Considering the drop of arrivals, we expect it to be 37.5 million bales.

Q: Do you foresee any change in Chinese policy for cotton & yarn?

A: China is sitting on stocks of more than 10 million tons. They don’t have any option, but to liquidate. They cannot survive if they buy cotton from rest of the world in same volumes as they did in the past. In my opinion, they have to lower down procurement from rest of the world. I don’t think they will buy large quantity of cotton from rest of the world in the near future.

Q: CCI has been directly associated with cotton farmers because of purchase policy. Considering the bearish market trend in the near future, do you think farmers should grow less cotton?

A: Current MSP prices do not fully cover the cost of production of cotton farmers. As per my opinion, they have to look for another crop which can give them better margin and profit and which are also beneficial for them. Farmers should sow less cotton and opt for alternate crops. They should select commodities which the country needs.

Q: What new policy can be introduced to make textile industry sustainable?

A: The Government provides adequate subsidy to establish textile units. Entrepreneurs should be looking for end value chain instead of only ginning and spinning.  India has the 2nd largest consumer population. Capacity of spinning mills should be restricted by government because we have surplus cotton and yarn.

Q: The textile industry is a capital intensive industry. It currently faces critical problems of debts and defaults. What policy can be enforced to restore law and order in textile trade?

A: Regulatory policies should be made by Government of India from time to time to facilitate trade. There is a constant friction and mismatch between value chains because of market fluctuation.

Q: What message would you like to spread through the medium of COTTONGURUTM Fortnightly Newsletter to thousands of cotton textile companies & professionals?

A: I think you are doing legitimate & holistic job for cotton trade because you also know that cotton trade is full with rumor. This report which you are circulating is authentic and useful for trade.

Exclusive interview with thought leader Mr. Suresh Kotak, Chairman of Kotak & Co.


Q: How was the year 2014-15 for the textile industry?

A: I think, 2014-15 was not a comfortable year for textile industry. We found lot of difficulties because of various reasons such as national and international policies.

Q: With so much dependence on global factors, what must be done to bring sustainability of the industry?

A: Global factors are going to stay. We must accept that commodities which are used to as functionality and utility. Different commodities have different values. We have to adjust with time and not to expect time to adjust with us. It is not the matter of value addition; we have to unlock the values.

Q: Must we grow less cotton to increase demand?

A: cotton is ideal most fibre. Cotton has certain enhancement advantage. It is renewable resource. It is environment friendly. You cannot desert the world.

Q: Do you think there is a saturation of Ginning & Spinning mills, especially in India?

A: ginning factory has to be next door of plantation area. Even spinning factory should be near the area of ginning factory. Textile industry is compact industry. Old economy won’t stay for long time. Transport cost takes more shares.

Q: Why are spinning mills in trouble when the Indian rupee is depreciating and prices of cotton are steady?

A: the spinning mills are going with all hack net ideas. They don’t take advantage of modern mechanism of ageing. Mills today make losses because they don’t know before manufacturing where inventory depreciation. They must protect themselves long age i.e. mechanism available if you don’t use it. The natural consequence has to be loss and mills cannot make profit.

Q: Textile industry is capital intensive industry. It is currently facing critical problems of bad debts & defaults. What measures must be taken to enforce law & order in the textile industry.

A: all modern instruments of finance are available like structure finance; by protecting security and liquidity unless develop themselves credible, change their method, thinking. They cannot make profits and industry will suffer.

Q: What is your guidance for the students of textiles regarding opportunity and pay scale?

A: we have to create skill in textile for students. We not only need employment but also need employability. Without employability, employ is an empty word. If you don’t create employability your product get suffer and you are at a loss.

Q: What message would you like to spread through the medium of COTTONGURUTM Fortnightly Newsletter to thousands of cotton textile companies & professionals?

A: I appreciate your efforts. You are serving not only cotton but whole textile industry which is very appreciable. Your passion and dedication I always like. Create people with this kind of enthusiasm, we can make India best textile nation of the world.

Forthcoming Events

1. 5th International Textile Conference on “Emerging trends in Textile Industry-New Innovations (ETTI) 2015 on 13th& 14thAugust 2014, Erode, India



2.Asia Cotton Outlook, Vietnam, Aug 25-27, 2015

The cotton industry is one of the oldest industries in the world that has continued to thrive and flourish throughout the years with Asia especially China and Bangladesh playing a crucial role in driving demand.

Located on the Indochina Peninsula in Southeast Asia, Vietnam has one of the fastest-growing economies in Asia. Vietnam’s textile and garment sector has seen a steady and sustainable rise over the past years, and with more than 3,800 companies; it is the leading export sector. Similarly; the Government of Vietnam is actively seeking to grow cotton farming by allocating around 13600 kg of cotton seeds to assist the cotton project in seven provinces.

Also; as a member of The Association of Southeast Asian Nations (ASEAN) and Trans-Pacific Partnership (TPP), Vietnam stands to benefit greatly from the free trade agreement (FTA), making it a perfect location for cotton trade and investment

We would like to welcome the global cotton industry to Ho Chi Minh, Vietnam for the IBC’s Asia Cotton Outlook Summit 2015. This Inaugural conference will identify global trends, regional demand-supply patterns and price outlook for the cotton industry while focusing on technological updates and business opportunities across the cotton value chain

Vietnam Cotton & Spinning Association-VCOSA is delighted to support this conference, which will bring together top industry players, government decision makers and local industry bodies on a single platform to discuss strategies and solutions for the cotton market

The conference is your one stop solution for trade, policy and investment outlook and a fantastic opportunity to grow your global network and built business relationships

It is with great pleasure that we invite you to the Asia Cotton Outlook in Vietnam and we look forward to meeting you on the day.

We are proud to inform you that our MD, COTTONGURUTM Mr. Manish Daga has been invited as SPEAKER in both the above conferences.

International Market:

NYBOT is falling. The critical question is whether it will break the level of 60 and go lower. Situation in China is not good. Few countries consuming cotton like Turkey have witnessed currency devaluation making it difficult for them to import. Just now there are dark grey clouds everywhere as world cotton consumption is not seen rising with Crude in free fall and prices of synthetic yarn going down.

US: Cotton prices crumbled last week as more fears emerged that China, the world’s largest purchaser of cotton, may continue having problems with its economy. The weather forecast for the southern U.S. is dry, which is good news for the developing cotton crop.

Pakistan: New crop arrivals have begun. Raw cotton prices remain under pressure due to fear of rain damage which may produce water-laden lint due to the continuing rainfall in several parts of the cotton belt. Moreover, global weakness in cotton and yarn prices is also pressuring the cotton prices.

Some of the textile and all its affiliated sectors have reportedly started to close down. Besides the imposition of withholding tax and high costs of inputs, the textile industry leaders are complaining that the resultant high cost of doing business is making them non-competitive.

Important Observations:

Theory of relativity: Co-relation between oil and cotton

Closely look at the historical chart between Jan 2010 and Jan 2015 and share your views. Subscribers are requested to share similar observations of co-relativity between Cotton and other commodities.


Important Reports:

COTTONGURUTM’s China Report:

Our MD, COTTONGURUTM Mr. Manish Daga recently visited Hangzhou, China as a SPEAKER during the China Cotton Forum 2015 on the topic

“Sustainability of the cotton supply value chain”

(Either all of us will survive, or none will)

China is seeking to reduce its own record stockpiles. This might cut imports next season to as low as 5 million bales, which would be the smallest since 2003.China’s imports in the first half of the year slumped 33 % to 933,853 metric tons, customs data shows. Only a small portion of the cotton offered at the state auctions this year was sold. Silver Cotton Information Center learned from interviews with many textile companies that some textile companies think the quality of cotton reserves has been degrading so much that they can no longer meet the buyers’ needs. Some other textile companies noted that they might purchase cotton reserves if there is an undersupply situation on the spot market.

Until recently, China was the perfect model of cheap mass manufacturing. Textile production in China is becoming increasingly unprofitable after years of rising wages, higher energy bills and mounting logistical costs, as well as new the government restriction on the import of cotton. According to the Boston Consulting Group, manufacturing wages adjusted for productivity have almost tripled in China over the last decade, to an estimated $12.47 an hour last year from $4.35 an hour in 2004.Rising costs in China are causing a shift of some types of manufacturing to lower-cost countries like India , Vietnam, Bangladesh, Pakistan and even the USA.

The Chinese economy presently seems to be heading towards further decline mainly due to sharp decline in industrial profits in recent months. Chinese shares prices fell to deep depth when they suffered their biggest one day fall in 8 years in the last fortnight. Being the second largest economy of the world, economic trouble in China will have a significant impact on the revival of the global economy.

Some of the key observations:

  • Cotton has no price advantage for stake holders.
  • Quality is vital to the survival of cotton enterprises.
  • Supply and demand of cotton and yarn is distorted under the intervention of policy.
  • Cotton mills are advised to leverage risk by innovation, research, technology, hedging and optimization of resources.
  • Government’s “One Belt One Road” strategy is expected to fuel robust development of cotton textile industry in Xinjiang.
  • The import policy of sliding duty was confusing and tricky, especially for the SME’s.
  • Record breaking increase in monthly import of cotton yarn in June 2015.Jan-Jun year on year yarn imports up by nearly 20 %.
  • Many Chinese mills have stopped spinning coarse cotton counts between 8 to 25 s.
  • China will continue to import a good volume of cotton yarn in 2015.


For 2015/16, world production, beginning stocks, and trade are raised slightly. Consumption is down and ending stocks are higher. The U.S. forecast shows higher exports and lower use and ending stocks. The U.S. season-average farm price is projected at 62 cents per pound, up 2 cents. For 2014/15, world production, beginning stocks, and trade are raised slightly. Consumption is down and ending stocks are higher. The U.S. forecast for 2014/15 shows higher exports and lower use and ending stocks. The forecast for the U.S. season-average farm price is unchanged at 60.5 cents per pound.


Large Cotton Stocks Likely to Persist in 2015/16

In 2014/15, world ending stocks are estimated to have risen by 9% to 22 million tons, reflecting a stock-to use ratio of 90%. From 2010/11 through the end of 2014/15, the world has accumulated 13.4 million tons of stock due to production exceeding consumption. In 2015/16, stocks are projected to decrease 5% to just under 21 million tons, reducing the excess volume by around 1 million tons. After increasing 16% to 9.4 million tons in 2014/15, stocks held outside of China are expected to decrease by 4%, to 9 million tons, by the end of 2015/16. Much of the world’s excess stock is held by the Chinese government from purchases made by the China National Cotton Reserve Corporation under its stockpiling policy from 2011-2014. The Reserve made its final purchases of the 2013/14 crop in March 2014 with sales continuing through August 2014, ending with an accumulated volume of around 11.3 million tons. On July 10, the Chinese government started to sell its stockpiles at prices close to the current domestic market price in the hopes of maintaining market stability. The cumulative volume of cotton sold through the end of July is around 40,000 tons. India’s ending stocks are estimated at 2.2 million tons in 2014/15, which is the second largest volume of stocks. Part of the increased volume is held by the Indian government, which procured stocks under its minimum price support program. Government purchases in 2014/15 are estimated at around 1.5 million tons, and sales through the end of July at around 650,000 tons. However, exports from India have fallen by 51% to 980,000 tons, also contributing to the buildup of stocks.

Stocks in 2015/16 are projected to decrease as consumption overtakes production for the first time in five seasons. World production in 2015/16 is forecast down 9% to 23.8 million tons. Output is expected to fall from 2% to 16% in the five largest producing countries. Rising costs of production and a decreased subsidy in China are likely to lead to a 16% drop in production to 5.4 million tons. India’s production is forecast down just 2% to 6.4 million tons due to improved yields from better monsoon weather this season and low prices for competing crops reducing the loss of cotton area. World consumption is projected to rise by 2% to 24.9 million tons in 2015/16. China’s consumption is forecast to remain stable at around 7.7 million tons. However, mill use is expected to grow in the next four largest consuming countries.

World cotton trade is expected to remain stable at 7.7 million tons in 2015/16. In 2015, the Chinese government limited import quota to the volume required under WTO rules of 894,000 tons, in part to spur demand for domestic cotton and Reserve sales. Given the large volume of stocks within China, it will likely maintain the restricted import volumes through 2016, and China’s imports could fall 10% to 1.6 million tons in 2015/16. Imports outside of China are forecast to increase by 4% to 6.1 million tons.


Cotton Association of India (CAI):

The Cotton Association of India (CAI) has retained the estimate of the crop at 38.27 million bales in 2014-15 marketing year (October-September). The association said the CCI has procured about 8.7 million bales to provide price support to the farmers, but has not been able to sell the stocks.

The pace at which the commodity is getting disposed, a sizable quantity is likely to remain unsold at the end of the season. The CAI states that the country needs to learn a lesson from the mistakes China made and dispose of the cotton lying with CCI quickly, to avoid getting into a China-like situation.

Government Reports:

  • The cabinet approved the expenditure of INR 181 billion (USD 2.8 billion) for 2015 – 16 to enable the subvention scheme on short term crop loans at INR 0.3 million each to farmers.
  • The Director General of Foreign Trade (DGFT) has extended duty benefits to 63 more handicraft items under the Merchandise Exports from India Scheme (MEIS).

Technical Reports:



ICE Cotton locked in 62-67 range since long, areas closer to 62 has offered good support in past. ICE cotton is trading weakish and likely to test key support of 62 again. Breach below 62 can see Bears in command with possible targets of 57 with some support coming in around 60. 57 now remains a key medium to long term bottom. Traders are advised to have short bias below 62 levels and long bias only above 67.

Key Supports 62.20-59.83-57.30,

Key Resistances 65.50-67.50-70.30-71.50.



MCX Cotton is lot more volatile and choppy as compared to ICE Cotton. 15170 areas are key levels for the Bulls to defend. Below 15170 expect weakness, inline with international trend (if ICE Futures also trades below 62). 13970 remains a key medium to long term bottom. Caution advised against fresh longs, traders can go short below 15170 (if ICE Futures also trade below 62)

Key Supports 15170-14360-13970,

Key Resistances 14890-16300-16580-16890.

Top Interviews:

In order to share the vision of the thought leaders, COTTONGURUTM is interviewing India’s top 10 mills, top 10 Ginners and relevant leaders of the textile industry to get their ideas and views.

  1. Jose Sette, Executive director, ICAC

China is changing policy of cotton import and the exports market will be very tough this year. What India needs to do is….for more, log on to

  1. B. K. Mishra CMD, Cotton Corporation of India (CCI)

CCI is completely equipped to start purchase operations in India provided…. for more, log on to

  1. Vikrambhai Patel, Chairman, Krishna Cotton Industries,Vijapur (Gujarat)

The only way to survive in this cotton recession period is to…. for more, log on to

  1. Dilipbhai Patel, Chairman, Raja Industries,Kadi (Gujarat)

The cotton crop for the season 2014-15 is expected to be….

for more, log on to

  1. Hari Thiagaraja, Executive Director, Thiagaraja Mills, Madurai

Our purchase program for the new season will depend upon… for more, log on to

  1. Ashish Shah, Executive Director, Aarvee Denims, Ahmedabad

Provided Government agencies do not intervene and the crop estimates are correct, cotton market is expected to remain in the range of …. for more, log on to

  1. Suresh Kotak, Chairman Kotak & Co., Mumbai

There is demand pool in Indian Cotton Economy. To nullify the effect of recession, we have to use the option of …. for more, log on to

  1. Prashant Mohota, Managing Director, GIMAtex Industries Pvt. Ltd., Maharashtra.

Recession and crisis is sometimes best opportunity for an established player in the spinning industry because…. for more, log on to