According to the USDA’s January supply and demand forecast, global cotton production was reduced by 1 million bales to 112.9 million bales, consumption increased by 100,000 bales to 115.7 million bales, and opening stocks were reduced by 143,000 bales to 99.3 million bales. Bag. After the above adjustments are completed, the global ending inventory for this year plus 1.2 million bales will be 96.3 million bales.
This month’s forecast has made adjustments to the output of many countries. The biggest adjustment is in the United States, where output has been reduced by 1 million bales month-on-month. This is the second consecutive month that U.S. cotton output has been significantly reduced. December has been Lowered by 1.2 million bales. After the adjustment, U.S. cotton production dropped to less than 15 million bales, a decrease of 5 million bales year-on-year.
The adjustments to the output of other countries mainly include: Greece increases by 140,000 bales, Australia increases by 100,000 bales, Turkey increases by 100,000 bales, Mali decreases by 115,000 bales, and Pakistan decreases by 200,000 bales. Pakistan’s output dropped to 4.3 million bales after adjustment, which is basically half of the average cotton output in the past two years (8.2 million bales).
From the perspective of consumption, the main adjustments include: China increased by 500,000 packages to 38.5 million packages, Turkey increased by 200,000 packages, the United States decreased by 100,000 packages, and Vietnam decreased by 100,000 packages. Indonesia reduced its sales by 200,000 bales.
In terms of cotton imports, China increased by 500,000 bales to 10.5 million bales, Pakistan increased by 200,000 bales to 4.9 million bales, Mexico increased by 100,000 bales, Turkey increased by 100,000 bales, and Vietnam decreased by 100,000 bales. , Indonesia reduced by 200,000 bales. In terms of exports, the United States increased by 250,000 packages to 15.3 million packages, Australia increased by 100,000 packages to 1.5 million packages, Mexico increased by 100,000 packages, and Mali decreased by 150,000 packages.
After this adjustment to the supply and demand forecast, the divergence between cotton prices and ending stocks has reduced, but still exists. As of August 2020, USDA’s forecast for global ending stocks for 2020/21 has dropped from 104.9 million bales to 96.3 million bales. Still, global ending stocks are the fourth-highest on record. The current forecast of global cotton consumption (115.7 million bales) is approximately 5 million bales less than before the outbreak (120 million bales).
High inventories and reduced consumption have led to a high inventory-to-consumption ratio. The inventory-to-consumption ratio in the current year is still as high as 83.2%, the fourth highest in history. In the middle of the first decade of the 21st century (about 15 years ago), when the global inventory-to-consumption ratio was close to 50%, it was already at a very high level. From 2004/05 to 2006/07, the average global inventory-to-consumption ratio was 53.2%. At that time The average price of the New York futures front-month contract is 51.2 cents/pound (calculated with an annual inflation rate of 2%, the average price is 68.9 cents/pound). Currently, the front-month ICE futures contract is at 82 cents/pound, and the inventory-to-consumption ratio is 83.2%.
According to the latest cotton farmer survey, the US cotton area may shrink by 5% this year. As international cotton prices rise, cotton planting intentions are expected to increase. The National Cotton Council (NCC) will release the intended cotton planting area in the United States in 2021 at its annual meeting on February 12-14. The U.S. Department of Agriculture will release the global cotton supply and demand forecast for 2021/22 and the preliminary forecast of U.S. cotton planting area at the Outlook Forum on February 18-19. </p
