fundamentals of cottonfundamentals of...
TRANSCRIPT
Fundamentals of CottonFundamentals of Cotton
Presented by :
Chowda Reddy
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Commodities Research Desk
Introduction
Cotton - King of Fibres (belongs to the order Malvales,family Malvaceae)
Sowing : June - July, Harvest: September – December
Arrivals extend till April
More than 25 varieties are cultivated in IndiaMore than 25 varieties are cultivated in India
Provides employment to 4-5 million people
Cl ifi d b d Fib l thClassified based on Fibre length1. Short staple2. Medium staple
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3. Long and Extra long staple
Classification and percentage share
Staple Length Short Below 20.0 mmMedium 20.5 to 25.5 mmMedium Long 26.0 to 27.5 mmL 28 0 33 5Long 28.0 to 33.5 mmExtra Long 34 mm & above
E t LShort 3%
M diExtra Long2%
Medium 27%
M di
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Medium Long17%
Long 51%
Cotton products
Cotton
Lint (Fibre) Seed
T til Oil (15%) C k (83%)Textile Oil (15%) Cake(83%)
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Seasonality of Cotton
J F b M A M J J l A S O t N DJan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
China
US
India
Pakistan
BrazilBrazil
Uzbekistan
5Sowing Growth Stage Harvesting
Cotton production in India
USDA estimated output in India at 314 lakh bales in 2007-08
Cotton production in India
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Production increased by 35 lakh bales from last year
A i d b 4 13 l kh h t t 90 45 l kh h t iArea increased by 4.13 lakh hectares to 90.45 lakh hectares in2007-08
Gujarat 110 120 lakh bales and Maharashtra 70 lakh balesGujarat - 110-120 lakh bales and Maharashtra - 70 lakh bales
Annual output growth rate 10.76% between 1999-00 & 2007-08
Bt Cotton occupies about 40% total cotton area
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India Cotton Balance sheetQuantity in Lakh bales
2000 2001 2002 2003 2004 2005 2006 2007Particulars -01 -02 -03 -04 -05 -06 -07 -08
Beginning Stocks 63 48 66 46 54 112 103 94P d tiProduction (Lakh bales) 140 158 136 179 243 244 279 314Imports 20 31 16 10 13 5 5 5Total Supply 223 236 217 235 310 361 388 413Exports 1 1 1 9 8 44 61 78
T t l D C 173 170 170 173 190 214 232 232Total Dom. Cons. 173 170 170 173 190 214 232 232Ending Stocks 48 66 46 54 112 103 94 103
Stock to Use % 27.67 38.44 26.85 29.48 56.69 41.42 30.75 27.84
7Source: USDA
Major producing states
Cotton Production share of States
Haryana Oth
j p g
Haryana6%
MP 7%
Gujarat38%
Others7%
Punjab10%
Maharashtra19%
Andhra Pradesh13%
Gujarat Maharashtra Andhra Pradesh PunjabMadhya Pradesh Haryana Others
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Domestic consumption
C ti 00 01 01 02 02 03 03 04 04 05 05 06 06 07 07 08
Domestic consumption Lakh bales
Consumption 00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08Mill consumption 149.36 147.00 142.42 150.39 163.98 182.00 194.89 207.00Small Mill 10.97 11.70 11.63 13.00 16.57 20.00 21.26 23.00consumptionNon-Mill consumption
12.70 13.06 14.78 13.71 14.48 15.00 15.88 15.00
Total consumption
173.03 171.76 168.83 177.10 195.03 217.00 232.03 245.00
Export 1 1 1 9 8 44 61 78Total disappearance 173.63 172.26 169.67 189.21 204.17 264.00 290.03 310.00
9Sources : CAB
World production
Global production estimated at 152 million bales in 2007-08 down from 156 million bales last year
China is largest producer and contributes to one-third of total global output
India and US are other major producers and has share of 36%
India has overtaken US in terms of output during 2007-08
China is largest consumer (38%)China is largest consumer (38%)
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World Cotton Balance sheetWorld Cotton Balance sheetMillion bales
Area BeginniArea (Mln Ha)
Beginning Stocks
Production Imports
Total Supply Exports
Ending Stocks
Stock to Use %
2000/01 32 65 114 34 213 34 63 53.53000/0 3 65 3 3 3 63 53.53
2001/02 34 63 126 38 227 37 70 58.08
2002/03 30 70 113 39 222 39 58 46.16
2003/04 32 58 122 44 224 43 57 45.10
2004/05 36 57 156 43 256 45 73 52.78
2005/06 35 73 151 57 281 57 77 51 752005/06 35 73 151 57 281 57 77 51.75
2006/07 35 77 156 48 281 48 78 49.52
2007/08 34 78 152 50 281 50 76 47.54
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Major producing countriesMajor producing countries
Lakh Bales
Country 2000-
012001-
022002-
032003-
042004-
052005-
062006-
072007-
08
China 260 312 289 286 397 378 455 448
India 140 158 136 179 243 244 279 314
USA 220 260 220 234 298 306 276 244USA 220 260 220 234 298 306 276 244
Pakistan 107 106 102 100 143 130 127 115Brazil 55 45 50 77 76 60 90 91
Others 358 383 334 344 407 389 337 311Total 1141 1264 1132 1220 1563 1507 1563 1523
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Textiles
Textile Fibres
Textiles
Textile Fibres
Natural Fibres
Man – made Fibres
Plant (Cellulose) –Cotton
Animal (hair.cocoon)
Organic Inorganic (carbon, ceramic & glass)
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Cotton Textiles
Cotton accounts for 60% of textile consumption
Cotton textiles exports – Rs.49816 crores in 2006-07p
Cotton constitutes 34% of total textile exports
India’s textile industry likely to grow at 16% to $115India s textile industry likely to grow at 16% to $115 billion by 2012
Man made Fibre is competitor for CottonMan – made Fibre is competitor for Cotton
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Cotton Textiles
Man-made Fibre production has almost doubled during 1990-2005 to 32 million tonnes, while cotton output i d b 31% t 25 illi tincreased by 31% to 25 million tonnes
Consumption of Man-made Fibre has increased at an annual rate of 4 7% in global market while cotton rose byannual rate of 4.7% in global market, while cotton rose by 1.8% per annum between 1960 and 2002
Trade quotas abolished in 2005 by developed countriesTrade quotas abolished in 2005 by developed countries
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Kapas khali
Seed separated from cotton is further processed and by-products are kapas kali (oil seed cake) and oil
Crushing starts from October and extends till June
Oil seed cake (82-85%), oil (12-14%) and wastage (2-3%)
Cake used as cattle feed and oil used for edible purpose
Demand comes from Gujarat and Rajasthan j j
Most of the oil seed cake consumed domestically
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Domestic scenario of Kapas khali
(Qty in Million tonnes)
p
Year Crush Production Exports
(1000 MT) Domestic
consumption 2000-01 3.7 1.7 1 1.72001-02 3.8 1.8 7 1.82002-03 3.4 1.6 2 1.62003 04 4 3 2 0 1 2 02003-04 4.3 2.0 1 2.02004-05 5.9 2.8 1 2.82005-06 6.0 2.8 0 2.82006-07 6.6 3.1 0 3.12007-08 7.4 3.5 0 3.5
17Source: USDA
NCDEX contract specifications
Name of Commodity V 797 KapasBasis Ex- warehouse Surendernagar (Exclusive of all taxes )Basis Ex warehouse Surendernagar (Exclusive of all taxes )
Unit of trading 1 lot (200 maunds of 20 kg each i.e. 4 MT)Quotation/base value Rs. Per 20 kgTick size 10 paisaTrading month Contract for March, April and May expiry next year
will open for trading in May 10 of preceding yearwill open for trading in May 10, of preceding year
Delivery center Surendranagar (Gujarat)Delivery Sellers option
MCX – contract specifications are similar
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Bandhini contract – price limit is Rs.345.10 – Rs.505.10
Shankar Kapas contract specifications
Name of Commodity SHANKAR Kapas
Ticker Symbol SHANKRKPAS
p p
Basis Average of spot prices of the following stationsRajkot, Gondal, Kadi, Vijapur (Exclusive of VAT)
Unit of trading 1 lot (200 maunds of 20 kg each i.e. 4 MT)
D li it 1 l t (200 d f 20 k h i 4 MT)Delivery unit 1 lot (200 maunds of 20 kg each i.e. 4 MT)
Quotation/base value Rs. Per 20 kg
Tick size 10 paisa
Q li ifi i CQuality specifications Raw Cotton1. Staple LengthBasis : 28.5-29 mm
Delivery center Rajkot and Kadi (Gujarat) at Par y j ( j )
Additional Delivery centers
Goods meeting contract specifications may also be delivered at Guntur and Akola. The locational Premium/Discounts for Akola and Guntur will be announced before the launch of the contracts.
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Position limit Member: Maximum of 75,000 MT for all contractsClient: Maximum of 15,000 MT for all contracts
NYBOT Cotton
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Prices of Lint cotton (S 6)Prices of Lint cotton (S 6)
24 000
20 000
22,000
24,000
ndy
16 000
18,000
20,000
Pric
e pe
r Can
12,000
14,000
16,000
12,000Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sept
2003-04 2004-05 2005-06 2006-07
21Source: Cotton Corporation of India
Cotlook Index A The COTLOOK A INDEX is representative of the level of offering prices on the international raw cotton market
It is an average of the cheapest five quotations from a selection
Monthly Average Cotlook A Index 80
g p q(currently 19) of cotton traded globally
70
50
60
40
Augus
tSep
tembe
rOcto
ber
Novem
ber
Decem
ber
Janu
aryFeb
ruary
March
April
May
June July
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Sep O No De J F
2004-05 2005-06 2006-07 2007-08
In US Cents per lb
Cotlook Index A Cents per LbCents per Lb
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NYBOT Cotton Cents per Lb
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Kapas NCDEX April contract
25Supports – 505, 485 and Resistance – 545, 570
NCDEX Cocud May contract
26Supports – 377, 334 and Resistance – 476, 500
Factors to be watched out
Global cotton output estimated at 152 million bales during 2007-08 marginal lower than 156 million bales in 2006-07marginal lower than 156 million bales in 2006-07Cotton output India estimated at 314 lakh bales in 2007-08 higher than 279 lakh bales in 2006-07India exported 65 lakh bales in 2006 07 and this year these exports areIndia exported 65 lakh bales in 2006-07 and this year these exports are likely to touch 10 million bales (already 78 lakh bales exported)Strong export demand seen from China and Pakistan Arrivals of cotton declined to below one lakh bales from 2 5 lakhArrivals of cotton declined to below one lakh bales from 2.5 lakh bales in December Current arrivals are around 80000 bales
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Factors to be watched out (contd…)
Cotlook A Index made 10 year high of 92 centsCotlook A Index made 10 year high of 92 cents Correction between NCDEX Kapas and NYBOT Cotton: 0.8NCDEX and MCX have contracts for V - 797 variety, but it has less than 5% of total cotton o tp tthan 5% of total cotton outputFactors influencing the prices
Production (both domestic and global)A i l i d ti k tArrivals in domestic marketsExports from IndiaGlobal prices (NYBOT and Cotlook A Index)
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Price outlook
Cotton prices have moved up by Rs.170 per 20 Kgs (NCDEX April) and Kapas khali prices also moved by Rs. 120 per 20 kgs (NCDEX March) in the last 3-4 monthsGl b l i d 10 hi h f 92 LbGlobal cotton prices made 10 years high of 92 cents per LbPrices are likely to take some correction in near term Long term sentiments still remain strong with lower globalLong term sentiments still remain strong with lower global outputCotton prices may touch Rs 24000-25000 per candy in longCotton prices may touch Rs.24000-25000 per candy in long term Kapas khali prices may touch Rs.1000 per quintal in 4-5
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Kapas khali prices may touch Rs.1000 per quintal in 4 5 months
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