Last week, although the USDA further lowered its consumption forecast for this year, China took advantage of the current low price level to purchase large quantities of US cotton to once again support cotton prices. The ICE futures July contract has recovered by more than 10% in the past four weeks. According to statistics from the U.S. Department of Agriculture, China’s total contracted volume of U.S. cotton in the past three weeks has reached 236,000 tons, with an average of nearly 80,000 tons per week.
However, global textile production will experience double-digit declines this year, and the use of cotton in Asia will decline sharply. In terms of quantity, textile production may drop by about 30%, and the decline in chemical fiber prices has also brought new challenges to cotton consumption. Compared with April data, the US Department of Agriculture’s global cotton consumption further decreased by 5%, down 15.3% year-on-year this year, with consumption in China falling by 13.9%, Pakistan by 16%, and India by 14.6%.
With most countries currently either still closed or in the early stages of post-shutdown reopening, considerable uncertainty remains about how long the recession may last, how deep it will be, and what form the eventual recovery may take. Uncertainty. There are still three months left in the 2019/20 year, and USDA still has time to further lower its consumption forecast and further raise its ending stocks. The outlook for 2020/21 is even more uncertain, but one thing is clear, clothing retail has suffered severely.
The United States and the European Union released estimates of consumer spending by category in March, with apparel suffering more than any other item. Clothing consumer spending in the United States fell by 28% year-on-year, and clothing consumer spending in the EU fell by 42% year-on-year, both of which are the largest declines in history. April data is expected to show a larger decline. Although China is the first to emerge from the crisis, its retail sales in March and April were not encouraging, with both falling by about 20% year-on-year. This is in sharp contrast to the nearly 10% growth before the epidemic. Consumers everywhere may be very conservative in their consumption after the outbreak. </p