Global Perspective: Global Cotton Is Still In The Trend Of De Stocking

 

Due to the tight supply in Pakistan this year, cotton prices also reached a record high for many years, with an increase of more than 50%. It is expected that the cotton planting area in Pakistan will also increase significantly. At present, the early cotton planting areas without wheat planting are trying to plant cotton. In the short term, under the pattern of India Pakistan cotton supply continuing tight, the downward pressure of American cotton may be limited. However, the global cotton price center is expected to continue to move down as the next year's expansion and yield increase are expected to gradually fall.

USDA Outlook Forum released its forecast of cotton supply and demand in 2022 / 2023 for the first time last week. The global cotton planting area and output will increase as the market expects, forming a certain negative effect. However, from the overall supply and demand data, USDA Outlook Forum is still optimistic about the future consumption, which makes the global cotton still show the trend of de stocking in the next year. But in fact, the current global cotton consumption has been raised to the highest level in recent years, and there is the possibility of overestimation itself, and there is the possibility of significant downward adjustment of the later consumption forecast data.

Under the double pressure of high cost and weak demand, cotton sales in this year continued to slow. As of February 24, the national sales rate was 37.1%, a year-on-year decrease of 33.7 percentage points, 18.2 percentage points lower than the average of the past four years, of which the sales in Xinjiang was 34.7%, a year-on-year decrease of 35.3 percentage points and a decrease of 17.9 percentage points compared with the average of the past four years. At present, the repayment pressure of the upstream ginning plants is fair, and the willingness to support the price is still strong. The current spot quotation is relatively strong, and it does not fall significantly with the futures price. It is estimated that the cost side still has a certain supporting effect on the cotton price.

After the festival, downstream textile enterprises have resumed their work, but the enterprises that have started are mainly producing orders before the festival, with few new orders, and the overall tone is still weak. Recently, both domestic and foreign cotton yarn prices have been reduced, and the immediate profit of textile enterprises has continued to be negative, which makes the acceptance degree of high price cotton is not high, the purchase intention is generally not strong, and the cotton price is not driven upward under the weak demand. However, at present, the raw material inventory of textile enterprises is at a low level in the same period of history. The traditional peak season of gold, silver and silver in the textile industry is coming. It is expected that the replenishment of stocks will still exist. The focus is on when the downstream orders will be launched. If the orders can be delivered in the next peak season, a wave of replenishment will still be expected in March.

In the short term, the upstream and downstream will continue to play. Zheng Mian expects to continue the oscillatory sorting, and the long and short sides will compete repeatedly around 21000 yuan / T. however, it is still necessary to be vigilant against sudden negative risks brought about by the external macro environment. In the medium and long term, due to the increasing expectation of global cotton expansion, the supply and demand pattern of global cotton market is expected to gradually turn loose, and the outlook of bearish market will be maintained in the future.