U.S. cotton production in 2019/20 is expected to be 4.53 million tons, exports are expected to be 3.59 million tons, and ending stocks will increase by 270,000 tons to 1.33 million tons. As can be seen from the figure below, this year’s ending inventory pressure and inventory growth are both the highest in the past decade for US cotton, so the annual pressure is very high. So how does the US cotton export sales signing situation reflect the signing pressure?
According to According to statistics from the U.S. Cotton Export Weekly Report, as of the week of November 21, the cumulative sales volume of U.S. cotton in 2019/20 has reached 2.425 million tons, and the annual export is expected to be 3.59 million tons (the latest adjustment in November), a year-on-year increase of 11.8%. The current cumulative contract signing rate this year is 67.5%, compared with 71.3% in the same period last year. A total of 694,000 tons were shipped this year, a year-on-year increase of 17%; the shipping rate was 19.3%, compared with 18.5% in the same period last year.
Currently, part of the U.S. cotton contract orders that have been signed for 2019/20 include continued shipments in 2018/19 On the slow side, the remaining orders that could not be shipped later in the year were carried forward to 2019/20; the other part included orders that had to be moved back due to China’s trade war and tax increases, and orders that had to be moved back from 2018/19 due to price drops or other market reasons. Annual orders moved to 2019/20 orders. Therefore, the current contract volume of 2.425 million tons increased by 11.8% year-on-year, and the signing progress is also slower than last year. The actual reflection of subsequent signing power is insufficient, and the sales pressure of US cotton in the later part of this year is still relatively high. On the other hand, the recent falling prices in India have reflected the cost-effectiveness of exports. Pakistan refused to buy Indian cotton due to the tense relations between the two countries and instead went crazy to buy US cotton. This further promoted the superficial prosperity of US cotton exports in the short term and accumulated a large amount of demand in the international market. Hidden risks in later inventory.
As of the week of November 21, China’s cumulative net contracts for US cotton in 2019/20 429,000 tons, accounting for 17.7% of the total US cotton contract volume, an increase of 16% year-on-year. The Sino-U.S. trade friction that began in 2018 and the 25% U.S. cotton tariff that began on July 6 led to China extending some of its 2018/19 orders to 2019/20 (60,000-80,000 tons) starting in June 2018. (around), and there is a balance of 60,000 tons in 2018/19. This year, 60,000 tons of U.S. cotton have been shipped to China, down 7% year-on-year. There are 369,000 tons waiting for shipment, a year-on-year increase of 21%. There is little room for China to increase its shipments of U.S. cotton later this year, and there is still the possibility that China will cancel a large number of orders.
Based on the above points, we believe that behind the short-term boom in U.S. cotton sales, there is still a relatively large gap in U.S. cotton sales later in the year. The huge pressure will also put pressure on ICE’s market trend. </p
