Market Analysis: Analyze The Current Situation Of The Global Cotton Market And The Expected Future Uncertainty

In terms of futures, the cotton 2409 contract closed yesterday at 13525 yuan/ton, down 130 yuan/ton or 0.95% from the day before yesterday. 337262 positions and 10856 positions. In terms of spot goods, the arrival price of Xinjiang 3128B cotton in Xinjiang was 14652 yuan/ton, down 619 yuan/ton from the day before yesterday CF09+1120， 200 yuan/ton lower than the day before yesterday. The national average price is 15067 yuan/ton, down 266 yuan/ton from the day before yesterday. The spot basis is CF09+1540, up 100 yuan/ton from the previous day.

According to recent market information, in June, Australia's cotton exports reached 141000 tons, an increase of 297.7% month on month (35000 tons) and 14.0% year on year (122000 tons). From the export destination of that month, China again became the largest exporter of Australian cotton, with an export volume of 45000 tons, accounting for about 31.9% of the total export volume, followed by Vietnam (33000 tons), accounting for 23.2% of the total export volume, India (17000 tons) ranked third, accounting for 12.0%, followed by Bangladesh (11000 tons), accounting for 7.9% of the total export volume. It is expected that in the coming months, the market will have a good demand for Australian cotton, which will help maintain strong exports. Up to now, the cumulative export volume of Australian cotton in this year (2023.8-2024.7) is about 1.1 million tons, down about 5.0% year on year (about 1.158 million tons) and up about 68.7% compared with the same period in 2021/22 (about 652000 tons).

Zheng cotton prices continued to be weak yesterday. Internationally, the current production increase of American cotton and Brazilian cotton in the new year is expected to be strong. The global cotton output will increase significantly in 2024/25, the consumption growth is expected to be less than the output growth, and the ending inventory will accumulate slightly. As the actual planting area of American cotton was higher than expected, the USDA supply and demand report raised the new annual output of American cotton as expected. In the current situation of limited demand support, the global cotton market has turned to loose supply and demand, and the international cotton price still has downward pressure.

On the domestic side, from the supply side, the sliding standard tax quota "boots" has landed, and the distribution quantity is only 200000 tons, which is the smallest quantity since 2018, slightly lower than the market expectation, and has a relatively limited impact on the domestic cotton price. At present, the domestic commercial inventory continues to be destocked, but it is still higher than the same period last year. Since this year, China's cotton imports have increased significantly year on year. At present, domestic cotton resources are relatively abundant, and this quota release is more to meet the rigid needs of export-oriented enterprises.

On the demand side, the downstream startup rate continued to decline in July, and the order volume did not increase significantly. The downstream just needed to stock up, and the market delivery was relatively cold. On the whole, the short-term external market trend is weak, the pattern of strong domestic supply and weak domestic demand continues, the expectation of weak "golden nine and silver ten" peak season has increased, the cotton price is lack of obvious upward drive, the short-term forecast is weak, pay attention to the downstream orders in August.