Since Mar 2019, Indian cotton, S-6, 1-5/32, has welcomed a round of rise, and its price spread with Pakistani cotton, Grade-3, 1-1/16, and Brazilian cotton, M 1-1/8, enlarges obviously. In May, global cotton prices move lower overall, but the decrement of Indian cotton is limited, and prices present firmness. The firm prices may be supported from the supply side, under the influences of lower 2018/19 cotton output and the slower planting progress dragged down by less rainfall.

According to the latest report of USDA, Indian cotton output is projected at 25.50 million bales (480 pounds per bale) in 2018/19 season, down 12% or 3.50 million bales from last season, while demand is supposed to be 24.8 million bales, up 2.7% or 650,000 bales. Therefore, ending stocks are estimated to decrease by 22.8% to 7.125 million bales. The lower stocks give obvious support to domestic cotton prices.

Besides, the time for the price rise from Mar is corresponding to its domestic cotton crop growing period.

It is the last harvest period for Indian cotton crops in Mar every year, and the output is clear basically. Therefore, the cotton prices are obviously affected by the anticipation of lower cotton output.

Global cotton crop growing calendar

Country

Proportion of output

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

India

23.80%

harvests

planting

harvests

China

22.10%

planting

harvests

US

17.10%

planting

bolls setting

harvests

Brazil (7.5%)

Central-South

planting

harvests

planting

Northeast

planting

harvests

Pakistan

6.70%

planting

harvests

West Africa

5.00%

harvests

planting

Turkey

3.00%

planting

harvests

Australia

3.90%

harvests

planting

Greece

0.80%

planting

harvests

Currently, it is still the planting period for Indian cotton crops, and the new arrivals will come intensively till Nov, so during the period, the supply will depend on the stocks and imports.

By Jun 6, US cotton export sales to Indian have totaled 300kt in 2018/19 season, an increase of 71% year on year, and the outstanding sales reach 150kt. The export sales of 2019/20 US cotton have reached 20kt, up 20% year on year. The increase of imports fulfills the lower domestic cotton output somewhat.

US cotton export sales by countries till Jun 6
Unit: KT	Total sales of 2018/19	Yearly change %	Total exports	Yearly change %	Outstanding sales	Yearly change %	Total sales of 2019/20	Yearly change %
Total	3600	-6	2540	-14	1060	18	860	-23
Vietnam	830	12	640	12	190	11	80	-42
China	420	-30	310	-38	110	9	320	2
Turkey	360	-14	230	-25	130	16	10	-45
Indonesia	300	-21	180	-32	130	2	40	-67
Pakistan	310	0	280	-2	30	19	80	10
India	300	71	140	0	150	442	20	20
Bangladesh	230	3	130	-12	100	38	50	-48

The dominant factor to influence Indian cotton prices is still its domestic cotton output, and the new cotton output is directly affected by the planting areas.

According to DAC&FW, by Jun 14, Indian cotton planting areas have reached 15.318 million hectares in 2019/20 season, a decrease of 9.4% year on year. The areas in Gujarat are projected to decline by 16.5%, while Maharashtra, Telangana and Madhya Pradesh have not started the plantings. Only Rajasthan and Haryana sees a yearly growth of 30.7% and 2.4% respectively.

Planting areas in India (till Jun 14, unit: 100,000 hectares)
State	2019-2020	2018-2019	Change
Andhra pradesh	0.034	0.060	(0.026)
Telangana	0.000	1.700	(1.700)
Gujarat	0.400	0.479	(0.079)
Haryana	6.720	6.560	0.160
Karnataka	0.420	1.130	(0.710)
Madhya pradesh	0.000	1.090	(1.090)
Maharashtra	0.000	0.119	(0.119)
Odisha	0.000	0.102	(0.102)
Punjab	4.010	2.840	1.170
Rajasthan	3.450	2.639	0.811
Tamil nadu	0.022	0.024	(0.002)
Others	0.262	0.172	0.090
All India	15.318	16.915	(1.597)

Currently, cotton planting areas in major growing regions are obviously lower than the previous years, mainly affected by the sharp fall of rainfall in India.

According to DAC&FW, during the week from Jun 6 to Jun 12, the rainfall in the major cotton crop growing areas is 56.8mm, lower about 57% than the normal level. From Jun 1 to Jun 12, the rainfall is 91.4mm, down about 53% than the normal level. The lower rainfall restricts the sowing progress of cotton crops.

Rainfall in Indian major cotton growing areas (mm)
Date	Country			Gujarat			Maharashtra
	Major growing area(90.2%)			26.00%			22.70%
	Actual	Normal	Change	Actual	Normal	Change	Actual	Normal	Change
2019/6/6-6/12	56.8	132.1	-57%	0.4	13.0	-97%	12.2	37.0	-67%
2019/6/1-6/12	91.4	194.3	-53%	0.4	19.7	-98%	14.1	51.5	-73%

For the water storage in the major cotton growing areas, by Jun 13, there are 22.68 billion cubic meter (BCM) in 46 reservoirs monitored, an increase of 2.65 BCM year on year and 2.09BCM compared to the prior 10-year average. The current storage in Central and Northern regions is higher than the same period of last season, while that in Southern region is lower. Though the storage improves somewhat this year, the planting progress of cotton is more dependent on the influence of water on soil during the planting period. The storage is mainly used for the irrigation during the growing period.

Statis of current storage till Jun 13, 2019 (unit: BCM)
regions/state		No. of reservoirs monitored	Live capacity（BCM)	Live storage (BCM)			Storage as percentage of live capacity			% departure from 10 years
				current year	last year	last 10 years avg.	current year	last year	last 10 years avg.
central region (56.1%)	U.P.	2	6.36	0.76	0.68	0.85	12%	11%	13%	-11%
	UTTARAKHAND	2	4.81	0.80	0.21	0.59	17%	4%	12%	36%
	M.P.	6	27.32	6.99	6.51	5.04	26%	24%	18%	39%
	CHHATISGARH	2	3.81	1.51	1.75	1.66	40%	46%	44%	-9%
	sub-total	12	42.30	10.06	9.15	8.14	24%	22%	19%	24%
Northern region (17.2%)	H.P.	2	12.39	4.98	1.17	2.82	40%	9%	23%	77%
	PUNJAB	1	2.34	1.36	0.72	1.05	58%	31%	45%	30%
	RAJASTHAN	3	3.28	0.78	1.01	0.82	24%	31%	25%	-5%
	sub-total	6	18.01	7.12	2.90	4.69	40%	16%	26%	52%
Southern region (16.8%)	AP&TG	2	15.13	0.82	0.80	1.66	5%	5%	11%	-51%
	A.P	1	1.99	0.09	0.34	0.50	5%	17%	25%	-82%
	TELANGANA	2	2.92	0.27	0.34	0.41	9%	12%	14%	-34%
	KARNATAKA	14	23.49	3.05	4.35	3.30	13%	19%	14%	-8%
	KERALA	6	3.83	0.59	1.38	0.78	15%	36%	20%	-24%
	T.N.	6	4.23	0.68	0.77	1.11	16%	18%	26%	-39%
	sub-total	31	51.59	5.50	7.98	7.76	11%	15%	15%	-29%
Major growing area (90.2%)		49	111.90	22.68	20.03	20.59	20%	18%	18%	10%

In general, the decline of Indian cotton output in 2018/19 season gives strong support to its domestic cotton prices, and the rise of imports fulfills the lower cotton output somewhat. The decrease of rainfall drags down the cotton planting progress, which is relatively slower in Gujarat, Maharashtra, Telangana and Madhya Pradesh. From the angle of cotton supply side, Indian cotton prices are expected to keep firm in short run.