01 Market Divergence and Outlook
In the USDA monthly report, the estimate of the reduction in U.S. cotton production exceeded market expectations, and the U.S. cotton rose and stopped. In the August report, the focus on the downward adjustment of U.S. cotton production, as we all know, affected by the drought, the U.S. cotton growth rate continued to decline, this adjustment adjusted the U.S. cotton abandonment rate to 42.86%, the highest in the past decade, the yield was slightly lowered to 846 pounds / acre, slightly higher than the average level of the past decade, the overall output of U.S. cotton in 22/23 is estimated to be lowered by 640,000 tons to 2.74 million tons from July. While the August report continued to revise down global consumption for 22/23, rising production cuts still supported the U.S. cotton market rally on Friday night.
However, such high prices have brought obvious negative feedback downstream, and behind the USDA's sharp reduction in the new annual output of US cotton, the export of US cotton has been obviously slow. After the end of the 21/22 cotton year, U.S. cotton shipments totaled 2.97 million tons, down from the estimated 3.19 million tons of U.S. cotton exports in 21/22 this month. As an important buyer of U.S. cotton, China, Vietnam, Pakistan and Bangladesh have seen a significant decline in imports of U.S. cotton in 21/22, and although Southeast Asian textile production capacity has undertaken cotton textile production orders after the Xinjiang cotton ban, the development of Southeast Asian operating rates has shown the same trend as China: although the distribution of cakes is biased, the cakes are significantly shrinking.
In the U.S. cotton market, whether such an exaggerated U.S. cotton production cut can be successfully landed, and how the negative feedback brought by the high price should end, will be the focus of the future U.S. cotton plate game. At this time, we have to think, will the supply and demand of cotton in the new year be tight? Yes, but neither. The continuation of the cotton ban in Xinjiang and the possibility of future expansion have exacerbated the supply-side differentiation of the two markets: the expectation of xinjiang production increase and the expectation of Texas production reduction exist at the same time, but it is difficult to make a simple addition and subtraction method on the global supply and demand balance sheet. At the same time, the trend at the consumer level is intensifying: the accumulation of clothing and fabric wholesalers in the United States in June accelerated, with a year-on-year increase of 59.97%, and the retail inventory of clothing and clothing accessories in the United States in May increased by 23.02% year-on-year.
To sum up, the first paragraph describes the estimates of the USDA, while the second and third paragraphs describe the actual data given by the USDA and related institutions, the market is in a game of reality and expectations, but until it is completely reversed, it may take the whole industry chain to shift from passive accumulation to active destocking. Zheng Mian, who represents a weak supply and demand pattern, is gradually moving closer to reality, and the near-month contract is a relatively good short target.
02 Cotton spinning industry review
Cotton spinning industry review: this week's domestic cotton spot prices rose steadily, spot trading continued to improve compared with last week, in addition to the purchase of textile enterprises on Thursday Zheng cotton rose sharply during the traders to purchase a low price is also better, the recent ginning mill goods continued to accelerate. Pure cotton yarn market this week transaction is acceptable, low branch combing yarn transaction is relatively smooth, combed yarn transaction is still relatively light but also improved, pure cotton yarn price is still falling dominant, although the volume of goods increased, but basically to low-price transactions, downstream price pressure is more serious, spinning enterprises and traders to the warehouse willingness is also stronger, resulting in a continuous decline in the center of gravity of transactions. The market demand for cotton blank cloth has not improved, and the local knitting market has increased slightly, but the confidence of the weaving mill is still insufficient, and the price is still stable and weak.
03 Other data
1. Futures market
2. Production and supply side situation
3. Demand for alternatives
4. The difference between internal and external prices
5. Domestic cotton textile industry
6. Sales of domestic garment industry
7. Overseas cotton textile operation
This article originates from citic construction investment futures micro-information