Market Analysis: Pay Attention To The Dynamic Analysis Of Cotton Market

 

The expectation that the global cotton planting area will decrease significantly in the new year in the international market falls short. The output has slightly increased compared with last month and also slightly increased compared with last year. The adjustment of demand has changed from "strong recovery" to "moderate recovery", and now to "pessimistic outlook". The stock accumulation continues and the inventory pressure continues to increase. The main reason is the shrinking pressure of brokers in the world's major cotton textile consumer markets, mainly Europe and the United States. Since this year, Europe and the United States have continued to destock textile clothing. At the same time, Southeast Asia textile orders are insufficient. The light purchase and sales in the middle and lower reaches of the textile market make them more cautious in purchasing upstream raw materials, and the purchase and sales are lower than expected by the middle of the year. On the other hand, new cotton production areas have developed rapidly, such as Brazil and Australia, where cotton has ushered in historic harvests. Their quality has not only been significantly improved, but also their prices have obvious competitive advantages over American cotton.

In the fourth quarter, the pressure of supply and demand on the fundamentals is greater than the opportunity. The pressure of centralized supply and listing of new cotton during the peak supply season will continue to ferment in the fourth quarter, and the external macro pressure will remain high. The weak economy will drag down consumption expectations, leading to the possibility of further increase of future inventory pressure in the fourth quarter.

China's cotton output in 2023/2024 is expected to be 6.05 million tons, a year-on-year decrease of 670000 tons, annual consumption of 7.6 million tons, a year-on-year decrease of 100000 tons, imports of 1.7 million tons, a year-on-year increase of 280000 tons, and ending inventory of 5.84 million tons, a year-on-year increase of 130000 tons. The inventory consumption ratio will increase from 74.02% of the previous year to 76.67%, and the annual gap between production and demand will increase by 570000 tons, Annual production and sales declined, imports increased slightly, and final inventory increased slightly.

The planting area of Xinjiang is about - 8% year on year, and the output of Xinjiang is estimated to be 5.5-5.6 million tons. The yield per unit area in northern Xinjiang is generally lower than expected, while large-scale purchase in southern Xinjiang has not yet started. It is estimated that the cotton yield in Xinjiang is about 480-5.2 million tons. At present, a large number of new cotton has not been listed, and the "golden nine and silver ten" has not appeared. Downstream orders are poor. With the sales and overweight of national reserve cotton, the supply is sufficient. After the listing of new cotton in the fourth quarter, the stock accumulation continues, and the supply pressure will gradually appear.

Since this year, the price of bulk commodity market has been more dependent on the external market, that is, the overall trend and rhythm of the macroeconomic and financial markets fluctuate synchronously. At present, the world, especially Europe, America and other major cotton textile consumer regions are still facing high inflation pressure, and the global economy has fallen into a weak phase of the recession cycle, overlapping political and war conflicts, The fear of economic recession is still fermenting, and no one is spared. As a commodity with greater demand elasticity, cotton textile will have a more direct and specific response to economic development expectations. Consumer demand for energy, food and other necessities will largely crowd out the demand for textile and clothing commodities and other non necessities. In the fourth quarter, textile and clothing consumption in Europe, America and China is not expected to be optimistic.

To sum up, the cost is high, the production capacity is large, the output is increased, the demand is weak, the trade is reduced, the volume is low, the spot is high, the upstream, middle and downstream of the industrial chain is fragmented, the cost support is available, but not much, the medium and long term lines are subject to large range shocks, and the short term is subject to empty thinking. Zheng Mian is facing support test near 15000-16000 yuan/ton.