Since December 2020, the main ICE cotton contract has continued its upward trend. As of January 26, the ICE cotton March contract closed at 81.72 cents/pound, a monthly increase of 3.6 points, or 4.6%. The USDA report that drives up ICE cotton prices continues to make positive adjustments to the global cotton supply and demand situation.
USDA lowers US and New Year cotton production
(1) Fundamentals improve in 2020/2021
In the January report, USDA lowered the opening stocks of global cotton in 2020/2021 by 30,000 tons, the production by 220,000 tons, the consumption by 20,000 tons, and the ending stocks by 260,000 tons. Ton. In 2020/2021, cotton production decreased by 2.02 million tons year-on-year, and consumption increased by 2.86 million tons year-on-year. Production was insufficient to meet demand. Ending stocks decreased by 640,000 tons year-on-year, and the inventory-to-consumption ratio decreased by 13.5% year-on-year. The supply and demand situation has improved compared with the previous year.
In terms of major producing countries, the USDA report lowered the U.S. cotton production in 2020/2021 by 220,000 tons compared with the estimate in December 2020, and the ending inventory was lowered by 240,000 tons, 2020/2021. In 2021, U.S. cotton production decreased by 1.08 million tons year-on-year, ending stocks decreased by 580,000 tons year-on-year, and inventory consumption decreased by 15% year-on-year.
As for India, USDA did not make any adjustments in its January report. Overall, in 2020/2021, India’s cotton production remained flat year-on-year, with ending stocks increasing by 330,000 tons and inventory-to-sales ratio decreasing by 8.65%. The fundamental pressure on India’s stocks is still relatively high.
(2) US cotton inspection is nearly completed
According to statistics from the United States Department of Agriculture, as of 2021 In the week of January 21, 2020, the total inspection volume of U.S. upland cotton was 2.9932 million tons, accounting for 95.46% of the estimated production (314 tons); the total inspection volume of upland cotton and Pima cotton was 3.091 million tons, accounting for the total estimated production (3.256 million tons) 94.9%. The cumulative deliverable ratio is 75.6%.
The volume of U.S. cotton contracts in 2020/2021 will gradually equal the level of the same period last year, and the increase will increase thereafter
According to USDA U.S. Cotton Export weekly report data shows that as of the week of January 14, 2020/2021 U.S. upland cotton weekly contracts were 66,300 tons, a decrease of 10.3% from the previous week and a decrease of 1.2% from the previous four weeks, of which 28,000 tons were exported to Vietnam. Exports to Pakistan were 15,000 tons; total signed sales were 2,757,100 tons, a year-on-year decrease of 0.1%; weekly export shipments were 73,100 tons, an increase of 17.4% from the previous week, and an increase of 17.2% from the previous four weeks; cumulative export shipments were 1,388,100 tons, A year-on-year increase of 29.6%.
In 2020/2021, 5,407.4 tons of Pima cotton were newly signed each week, a decrease of 33.6% from the previous week and an increase of 8.0% from the level of the previous four weeks; the total signed sales were 141,000 tons, year-on-year An increase of 51.8%; the weekly export shipment volume was 1,894.0 tons, a decrease of 19.0% from the previous week, and a decrease of 35.9% from the previous four weeks; the cumulative export shipment volume was 81,900 tons, a year-on-year increase of 93.3%.
The total signed sales volume of US cotton upland cotton and Pima cotton in 2020/2021 is 2.8976 million tons, accounting for 87.3% of the annual forecast total export volume (332.03); the cumulative export shipment volume is 147.0 million tons, accounting for 50.7% of the total annual contract volume.
USDA increases China’s cotton imports and consumption in the new year
(1) 2020/2021 Annual fundamentals continue to improve
USDA raised China’s cotton imports and consumption in 2020/2021 by 110,000 tons in the January report, and the inventory-to-consumption ratio dropped by 1.24%. Therefore, According to forecasts, in 2020/2021, China’s cotton production is expected to increase by 50,000 tons year-on-year to 5.99 million tons, imports will increase by 730,000 tons to 2.29 million tons, consumption will increase by 1.2 million tons year-on-year to 8.38 million tons, and ending stocks are expected to decrease by 140,000 tons year-on-year. tons to 7.9 million tons, and the inventory consumption ratio decreased by 17.61% year-on-year. Overall, China’s cotton supply and demand situation in 2021/2022 is better than that in 2019/2020, which is conducive to the long-term strengthening of cotton prices.
(2) Cotton imports have seen positive growth for five consecutive months
In 2019/2020, Due to the outbreak of the COVID-19 epidemic, the demand in the domestic downstream market has shrunk, and the demand for foreign imported cotton has weakened, resulting in a significant reduction in the quantity of imported cotton. In 2019/2020, imported cotton totaled 1.59 million tons, a year-on-year decrease of 440,000 tons. Starting from the third quarter of 2020, with the recovery of overseas orders and the improvement of terminal exports, downstream demand for imported cotton has also recovered. From August to December 2020, single-month cotton imports maintained positive year-on-year growth. According to the latest data from customs statistics, my country’s cotton imports in December 2020 were 350,000 tons, an increase of 150,000 tons month-on-month and an increase of 200,000 tons year-on-year. In 2020, my country imported a total of 2.15 million tons of cotton, a year-on-year increase of 310,000 tons. In 2020/2021 (September to December), a total of 970,000 tons of cotton were imported, an increase of 560,000 tons year-on-year.
(3) Downstream terminal consumption continues to improve, and domestic and foreign sales increase year-on-year
Textile exports in a single month Positive growth has been maintained since the second quarter of 2020; the year-on-year decrease in clothing exports has continued to converge since May 2020, and turned to positive growth in August, with the year-on-year decline in cumulative exports continuing to converge. In December 2020, textile and clothing exports were US$26.2 billion, an increase of 5%, of which textile exports were US$12.29 billion, an increase of 11.67%; clothing exports were US$13.91 billion, a slight decrease of 0.3%. Textile and clothing exports were improving at the margin. From January to December 2020, the cumulative exports of textiles and clothing were US$291.21 billion, an increase of 9.58%, of which textile exports were US$153.83 billion, an increase of 29.2%; clothing exports were US$137.38 billion, a decrease of 6.4%.
The retail sales of clothing, shoes, hats, needles and textiles increased for five consecutive months from August to December 2020 compared with the same period in 2019. The retail sales of clothing, shoes, hats, needles and textiles in December 2019 were year-on-year. An increase of 3.8% to 152.66 billion yuan. From January to December 2020, cumulative retail sales were 1.23646 billion yuan, down 6.6% from the same period last year.
The United States, Pakistan, India and other countries are expected to reduce production significantly in the new year
According to internationalThe December 2020 report of the Cotton Advisory Committee (ICAC) predicts that global cotton production in 2020/2021 will be 24.68 million tons, a decrease of 220,000 tons from November 2020; consumption will be 24.26 million tons, a decrease from November 2020. A decrease of 90,000 tons; the trade volume was 9.4 million tons, an increase of 100,000 tons from November 2020; the ending inventory was 21.65 million tons, a decrease of 750,000 tons from November 2020; the inventory-to-consumption ratio was 89%, an increase of 100,000 tons from November 2020. Reduce it by 3 percentage points.
In the domestic market, as of January 27, the May contract of Zheng cotton closed at 15,105 yuan/ton. Zheng cotton has rebounded since mid-November and then oscillated upward. In early January, the market reached a maximum of 15,610 yuan/ton, and then fell back from the high. It is currently oscillating between 14,800-15,200 yuan/ton. The main driving force for the nearly two-month rise from mid-November 2020 to early January 2021 is the hot demand in the domestic cotton textile downstream market. Observing the data, we can find that at this stage, the demand of domestic downstream textile enterprises has improved, the operating rate has increased, the inventory of finished products has continued to be reduced, and has dropped to historical lows, and the purchase of raw materials has increased, pushing cotton prices higher. On the one hand, the boost in downstream demand is due to the need for stocking before the Spring Festival, and on the other hand, the export of terminal textile clothing continues to rise and external orders increase.
As the Spring Festival approaches, the atmosphere in the upstream and downstream of the textile industry has turned dull. Dyeing and cloth factories in some downstream areas have been on holiday one after another. In addition, the current inventory of raw materials is already at a high level, and the speed of purchasing lint by spinning companies is slowing down. Slowing down, cotton lacks strong factors to push up before the Spring Festival, and Zheng cotton is expected to run at a low level. According to historical data, the performance of the downstream textile market after the Spring Festival is as follows: increase in start-up rate, digestion of raw material inventory, and elimination of finished product inventory. Since a round of replenishment has been carried out before the holiday, the raw material inventory is relatively high. After the holiday, raw material inventory is generally digested and replenished. There are fewer phenomena.
In terms of the international market, the Cotton Research Institute of the Chinese Academy of Agricultural Sciences estimates that global cotton production in 2020/2021 will be 24.8 million tons, a decrease of about 1.2 million tons from the previous year. Among them, the United States, Pakistan, Countries such as India have significantly reduced production. Cotton consumption was 25 million tons, an increase of nearly 2.5 million tons over the previous year. The growth mainly came from China and India. Inventories fell to about 21.3 million tons. The United States and European Union countries continue to release huge amounts of currency into the market, and the inflationary effects it brings will gradually appear. It is expected that short-term international cotton prices will continue to rise. </p
