USDA: Cut US Cotton Production For Three Consecutive Months

The US Department of Agriculture's supply and demand report cut US cotton production for three consecutive months from August to October. The report in November will be released soon, focusing on its adjustment to US cotton production. At present, the progress of American cotton harvest is relatively fast. As of November 3, the cotton harvest rate of 15 major American cotton growing states was 63%, about 8 percentage points faster than that of the same period last year, and 9 percentage points faster than the average level of the same period in recent five years. As of the week of October 31, 2024, the cumulative inspection volume of American upland cotton+Pima cotton is 942300 tons, accounting for 30.5% of the estimated output of American cotton (the estimated output of American cotton in 2024/2025 is 3.09 million tons).

The global cotton supply and demand surplus in 2024/2025 has been reduced recently, but it is still in surplus, especially the continuous strong output in Brazil. In its report in October, the Brazilian National Commodity Company predicted the cotton output of next year for the first time. It is estimated that the cotton output will be 3.665 million tons, basically equal to the output in 2024.

The cotton picking in Xinjiang has basically ended. As of November 4, 2024, the cotton picking progress in Xinjiang is 94%, an increase of 11 percentage points over the previous week. Among them, the cotton picking work in northern Xinjiang has basically ended, and the picking progress is about 100%; The cotton picking progress in southern Xinjiang is about 90%, 18 percentage points higher than the previous week. This year, the lint processing in Xinjiang is relatively fast on a year-on-year basis. It is estimated that the cotton output in Xinjiang will be about 6 million tons. As of November 6, 2024, the total lint processing in Xinjiang will be 2.3896 million tons, a year-on-year increase of 32.67%.

The average purchase price of seed cotton in Xinjiang is about 6.3 yuan/kg, and the corresponding cost of new cotton is about 14500~15000 yuan/ton, which means that the cost of new cotton is basically fixed. Generally speaking, the cost of new cotton will form a strong support for cotton prices before the Spring Festival, and the selling pressure on new cotton is not strong before the Spring Festival. Next year, with the evolution of the fundamentals, the support of new cotton costs on the panel will gradually fade.

After November, demand entered the slack season, and the market generally held a cautious view on demand before the Spring Festival. From the basic point of view, Zheng Mian continued to experience narrow fluctuations. It is expected that the demand performance in the off-season will be generally stable. Pay attention to whether the small peak demand season can reappear before the Spring Festival.