In the USDA monthly report, the estimate of the reduction in U.S. cotton production exceeded market expectations, and U.S. cotton rose by the daily limit in response. In the August report, the U.S. cotton production was focused on being lowered. As we all know, affected by drought, the growth rate of U.S. cotton continues to decline. This adjustment has adjusted the U.S. cotton abandonment rate to 42.86%, which is the highest value in the past decade. The unit yield It was slightly lowered to 846 pounds/acre, slightly higher than the average level of the past ten years. The overall US cotton production estimate for 22/23 is lowered by 640,000 tons from July to 2.74 million tons. Although the August report continued to reduce global consumption in 22/23, rising expectations for production cuts still supported the daily limit of US cotton on Friday night.
However, such a high price has brought significant negative feedback to the downstream. Behind the USDA's sharp reduction in the production of US cotton in the new year, US cotton exports have shown obvious unsalable sales. After the end of the 21/22 cotton year, U.S. cotton has been shipped and exported a total of 2.97 million tons, which is lower than the 3.19 million tons of U.S. cotton exports estimated this month for the 21/22 year. As important buyers of U.S. cotton, imports of U.S. cotton from countries such as China, Vietnam, Pakistan and Bangladesh have declined significantly in 21/22. Although Southeast Asia's textile production capacity has taken on cotton textile production orders after the Xinjiang cotton ban, However, the development of operating rates in Southeast Asia shows the same trend as China: although the cake distribution is biased, the cake is shrinking significantly.
In the US cotton market, whether such an exaggerated US cotton production reduction can be successfully implemented and how the negative feedback caused by high prices will end will be the focus of the US cotton market game in the future. At this time we have to think, will the supply and demand of cotton be tight in the new year? Yes, but also no. The continuation of the cotton ban in Xinjiang and the possibility of expansion in the future have intensified the differentiation of the two markets at the supply level: expectations for increased production in Xinjiang and expectations for reduced production in Texas exist at the same time, but it is difficult for both to be reconciled on the global supply and demand balance sheet. Work out simple addition and subtraction. At the same time, trends at the consumer level are intensifying: U.S. clothing and fabric wholesalers' inventory accumulation accelerated in June, with a year-on-year increase of 59.97%, and U.S. clothing and clothing accessories retail inventories in May increased by 23.02% year-on-year.
To summarize, the first paragraph describes the USDA’s estimate, while the second and third paragraphs describe the actual data given by the USDA and related agencies. The market is in a game between reality and expectations, but it has to wait until it is completely reversed. Transformation may require the entire industry chain to shift from passive accumulation to active destocking. Zheng Mian, which represents the weak supply and demand pattern, the front-month contract that is gradually moving closer to reality is a better short target.
Cotton spinning industry review: Domestic cotton spot prices rose steadily this week, and spot trading continued to improve compared with last week. In addition to textile enterprise purchases, during the surge in Zheng cotton on Thursday, traders purchased low prices and fixed prices. Well, the shipment of goods from ginners has been accelerating recently. The transaction volume of the pure cotton yarn market this week is acceptable. The transaction volume of low-count carded yarn is relatively smooth. The transaction volume of combed yarn is still relatively light but has also improved. The price of pure cotton yarn is still dominated by decline. Although the shipment volume has increased, it is basically at a stable price. Transactions at low prices are mainly low-priced, with serious price reductions in the downstream sector. Textile companies and traders are also more willing to destock, resulting in a continuous decline in the focus of transactions. The market demand for 100% cotton gray fabrics has not yet improved, and some market proofing orders for knitted fabrics have increased slightly. However, the confidence of weaving mills is still insufficient, and prices are still stable but weak.
This article comes from CITIC Futures Micro Information
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