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Can there be an export Ban on Indian cotton for 2019/2020 crop year?

Indian cotton

Indian cotton is the most competitive cotton in this season. India is expected to produce 4.20 million bales of cotton during the 2019-2020 crop year. The domestic consumption is 2.20 million bales (They also import cotton) and 1.00 million bales have already been exported while 0.70 million bales are already booked. So, are we going to see the export ban a few months later?

Cotton Brainpower
Figure: India is expected to produce 4.20 million bales of cotton during the 2019-2020 crop year.

Ending stock of cotton 

The total ending stock of cotton is at a comfortable level for the rest of the world except China. But ending stock in China is at a lower level. But China after 2011 has moved towards non-cotton and therefore is not much of a concern. But China is still the number one consumer of cotton and any move by China is a major determinant of the cotton price.

world China ending cotton stock

Spec position going towards long from short

The spec position is going towards short to long which is an indication of the market consolidation.

Spec net long-short Jan 2020

Fixation strategy

ICE in my opinion despite the geopolitical situation would remain firm, as the supply-demand gap would tighten as we move forward the end of 2019-2020 season.

So, mills must be extremely cautious and set appropriate risk minimization strategies based on their information matrix and risk exposure.

Suggestions for improvement of profitability

Try to exercise appropriate tools to minimize risk through remaining long on volatility.

If anyone has any feedback or input regarding the published news, please contact: info@textiletoday.com.bd

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