“A Merchants outlook to Indian Cotton”
How the world perceives Indian cotton Quality Over Time
Over the last decade the average grade has come down Moisture content in the bales have gone up Trash levels have increased
80%
10.00% 9.00% 8.00% 7.00% 6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00%
70% 60% 50% 40% 30% 20%
As a result Indian is the only cotton being sold under moisture and trash guarantees. More and more emphasis on HVIs than hand staple Relative discount to other growths have increased. Lack of universal standards – last year Middling quality was selling at 400 pts range!! Contamination and Adulteration What supports: Organic Cotton (unique) Longer staples like 30 mm+ (fairly unique) Spot Cotton / Transit
10% 0% 2008 Grade A
2013 Grade B
2018
Grade C
Mositure
Trash
Relative Values paid by Customers 1200 1000 800 600 400 200 0 20008
2012 GC 31-3-36
Brazillian
2015 Indian
2018 WAF
Perspective from individual markets All prior to the Big MSP move and growing US and Brazil crops. China Volume & Share 300000
17%
250000
15%
200000
13%
150000
11%
100000
9%
50000
7%
0
Market Share in China is at best stable Volume largely dependent on Chinese imports Probably the best paying market So what is China buying now? How is the market structure
5% 14/15
15/16 Indian Export
16/17
17/18
Share of Export
Bangladesh Volume & Share 450000
31%
400000
29%
350000
27%
300000
Dropping Market share in Bangladesh Stable volume but large portion is organic and business with Mills on ICA default mills
25%
250000
23%
200000
21%
150000 100000
19%
50000
17%
0
15% 14/15
15/16 Indian Export
16/17 Share of Import
17/18
So what is Bangladesh buying now? How is the market structure
Perspective from individual markets Pakistan Volume & Share 500000 450000 400000 350000 300000 250000 200000 150000 100000 50000 0
70% 60% 50% 40% 30% 20% 10% 14/15
15/16 Indian Export
16/17
17/18
Market Share in Pakistan is dropping Highly variable volume as depends completely on their own crop and relative values Extremely competitive and low margin So what is Pakistan buying now? How is the market structure
Share of Import
Vietnam Volume & Share 250000
30%
200000
25% 20%
150000 15%
Stable Market share in Vietnam Lot of business with mills on ICA default mills. Low end market so again very competitive
100000 10% 50000
5%
0
0% 14/15
15/16 Indian Export
16/17 Share of Import
17/18
So what is Vietnam buying now? How is the market structure
Indian Mills – what they should look at Long term, the surplus has a declining trend growing dependence on Imports Cost to carry, capital deployment v/s imports
Surplus 4,000
20%
3,000
15%
2,000
10%
1,000
5%
0
0% 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
Being aware of relative values buying what is “relatively cheap” and not necessarily the cheapest
-1,000
-5%
-2,000
-10%
-3,000
-15%
-4,000
-20%
-5,000
-25% Prod - (Cons + Exp)
Timing of Imports 1000 ON in January or 1200 ON in June
As % of Cons
Linear (As % of Cons)
Mali Production Breakup
Being open to “Other growths” Actual production of Juli/S is 13% but 80% of Mali sold as Juli/S What value is 41-4 versus 41-3 Risk Management or Procurement
35% 30% 25% 20% 15% 10% 5% 0% Juli/S
Juli
Kati
Kati/C
Others