Prices soared by 30%. What is the actual situation of the new season cotton market?

Since the beginning of this year, all major cotton supplier countries in the world have been affected by extreme weather, and cotton production has decreased. Due to the impact of …

Since the beginning of this year, all major cotton supplier countries in the world have been affected by extreme weather, and cotton production has decreased. Due to the impact of extreme weather in various countries, global cotton prices have soared by as much as 30%.

According to market news, India, the world’s largest cotton producer, suffered from continuous heavy rains and pest and disease disasters this summer, which seriously affected India’s cotton production, forcing the country to import cotton from overseas this year. The increasingly severe drought in the United States, the world’s largest cotton exporter, has reduced cotton production by 28% to the lowest level in more than 10 years. Brazil, the second largest exporter of cotton, has also experienced high temperature and drought weather, which has reduced the country’s output by nearly 30%.

Some overseas analysts also said that all signs indicate that the downward pressure on the cotton supply side is far greater than the demand side. As cotton production declines, cotton prices will rise “significantly” in the coming months.

In the domestic market, Xinjiang’s new season cotton has not yet started picking, and relevant agencies online have announced the purchase prices of seed cotton in various places in Xinjiang.

Mr. Wei, a senior professional in the Beijing cotton market, told reporters that on the eve of the launch of new cotton, various market entities stood in their respective positions and analyzed the opening price of new cotton from different angles. Currently, not only are most areas in the country experiencing high temperatures, but the production situation in major cotton-producing countries in the international market is also not optimistic. Coupled with the sharp fluctuations in domestic and even global cotton prices, various alarmist rumors continue to appear, and some predictions and data involving cotton prices are basically unreliable.

What is the actual situation of the domestic and global cotton markets, especially the new season cotton market?

Teacher Wei said that this year, almost all large cotton supplier countries in the world have reduced production due to extreme weather. According to the data analysis available, Brazil’s new season cotton is currently in the harvest period, and the market generally expects the output to be around 2.6 million tons, while last year The output is 2.36 million tons, and it is not true that the output is reduced by 30%. In addition, cotton planting in Brazil will not start until after November this year. In the current international market, cotton prices are at historically high levels. Cotton has a great price advantage over corn and soybeans. Brazil’s cotton planting area will be large next quarter. The probability has increased, which has little to do with the current high temperature and dry weather.

“Judging from the current operation of the international cotton market, the focus of the supply side of the market is on the U.S. cotton market, and the development trend of the U.S. cotton market has been highlighted in USDA’s latest monthly report: The latest monthly report shows that cotton output in a single month The reduction of 640,000 tons can be described as ‘one step’. From the perspective of the data adjustment itself, the story on the short-term supply side basically ends here. Later, we need to pay attention to whether extreme weather such as hurricanes will occur in the production areas. After the monthly report is released, US cotton prices There has been a sharp rise, once approaching 120 cents/pound. The export of cotton from the United States has basically stagnated. Faced with the current historical high prices, it is difficult to have a large number of orders in the market, and basically there are not many customers to sign contracts. In addition, from Judging from the situation on the consumer side, consumption in the second half of the year mainly comes from Southeast Asia. These countries are also facing a decline in industrial profits and a large reduction in orders. There is no optimistic sentiment on the entire consumer side.” Mr. Wei further analyzed.

There is a popular prediction in the market: India, the world’s largest cotton producer, has suffered from continuous heavy rains and pest and disease disasters this summer, which will seriously affect India’s cotton production and force the country to import cotton from overseas. Teacher Wei also holds a different view on this: “Currently, the new season cotton planting area in the two main producing countries, India and Pakistan, has increased by more than 6% year-on-year. Specifically, the new season cotton planting area in India is 12.31 million hectares, year-on-year. An increase of 6%. Pakistan’s new season cotton planting area is approximately 2.06 million hectares, a year-on-year increase of 6.7%. At the same time, India’s new season cotton planting has not yet ended. The market is worried that India and Pakistan will experience excessive monsoon rains this year, which may cause It will have a certain adverse impact on the later production assessment, but as long as the rainfall does not cause major disasters, overall the estimated new season cotton production in India and Pakistan is more likely to increase year-on-year.”

Wu Xinyang, a soft commodity researcher at CITIC Futures, said that USDA’s latest monthly report’s estimate of the reduction in U.S. cotton production exceeded market expectations, and the market has fully digested this bullishness. If we consider that the U.S. cotton planting area has increased this year compared with last year, In part, the USDA has adjusted the U.S. cotton seed abandonment rate to 42.86%, which is somewhat problematic. It is estimated that the final unit yield and total output data of U.S. cotton will be continuously revised in the future. Judging from the recent export data of US cotton and the accumulation of downstream products in the cotton industry, the probability of US cotton weakening in the future is not small. Without the support of the demand side, changes on the supply side are not very important.

In addition, information released by the China Cotton Information Network shows that individual cotton fields in Turpan and Bachu have spun cotton. This year, the cotton growth process in Xinjiang has been advanced by 7 to 10 days. The launch time of new cotton will be advanced to mid-September. Cotton vendors in Turpan area purchase handpicked products sporadically. The purchase price of cotton is 6.3 yuan/kg, but it is not representative.

“Cotton has spun out in some cotton fields. There are no cotton farmers picking cotton here in Bachu County. Cotton merchants and ginners have not started to purchase cotton. There are no sporadic purchases in the market.” A cotton processing, trading and warehousing company in Bachu County Corporate business responsibilityPeople told reporters that the current cotton growth is relatively good, but high temperature weather has occurred in some areas, which will mainly affect the “horse value” of the new season seed cotton, which will cause the “horse value” to be high. The estimated opening price is 5.5-6/kg. . It is understood that as of now, this cotton company still has 80,000 tons of old cotton in stock, compared with about 50,000 tons in the same period last year.

A cotton farmer in Hutubi County told reporters that this year’s hot weather in Xinjiang’s cotton areas mainly occurred in late July. Because the cotton fields have good infrastructure and all drip irrigation operations are implemented, the hot weather did not have too much adverse impact on the growth and development of cotton. On the contrary, cotton production will increase due to high accumulated temperature and sufficient photosynthesis. It is expected that both unit yield and total output will be higher than last year. In addition, the reporter learned that the cost of seed cotton production in Xinjiang will increase this year. The key factor is the increase in agricultural input prices, water fees, etc., but the increase in output will dilute part of the cost.

A cotton merchant from Korla City told reporters that as of now, many ginners in various parts of Xinjiang are still bidding online or discussing contracting business offline. Many ginners are under great financial pressure and are actively acquiring, especially panic buying. Enthusiasm for the new season seed cotton is not high. In the market context where ginners dominate the purchase price of seed cotton, and with large cotton groups contracting a large number of gins this year, it is expected that the say in the purchase price of new season seed cotton will increase. Somewhat tilted. In order to reduce the cost of purchasing new cotton and dilute the high-priced inventory of old cotton, it is expected that ginners and others will choose to purchase at a reduced price.

According to Wang Sijia, a cotton researcher at Henan Tongzhou Cotton Industry Co., Ltd., the top five major cotton producing countries in the world are China, India, the United States, Brazil and Pakistan. A comprehensive analysis of the output of the five major cotton-producing countries in 2022/2023 shows that the global production is still expected to increase in 2022/2023. First of all, from the perspective of my country’s cotton market, the National Cotton Market Inspection System survey shows that my country’s cotton planting area will increase by 2.5% year-on-year in 2022/2023, and the output is expected to be 6.06 million tons, a year-on-year increase of about 200,000 tons, an increase of 4.5%. The weather in Xinjiang will be good in 2022/2023, and a bumper harvest is basically a foregone conclusion. Secondly, as of August 12, the cotton planting area in India was 12.31 million hectares, a year-on-year increase of 6%. The current rainfall in India’s production areas has not had a substantial impact on output. The US Department of Agriculture assessed in the August monthly agricultural supply and demand report India’s cotton output in 2022/2023 is 5.99 million tons, an increase of 700,000 tons compared with the previous year. Thirdly, due to drought problems in the United States, the third largest producer, cotton production was significantly reduced by the United States Department of Agriculture by 640,000 tons to 2.74 million tons, the lowest in the past 10 years. Among them, the abandonment rate in Texas was adjusted to 64%, which was lower than the abandonment rate in 2011. The tillage rate is still higher, but comparing the droughts in 2011 and this year, we can find that this year’s drought is far less severe than the drought in 2011, so the U.S. output may be underestimated. Finally, judging from the situation in Brazil, the fourth largest producer, due to dry weather in the Brazilian production areas in the previous period, the current output estimate has been lowered than the previously expected 2.8 million tons, but it is still stable at 2.6 million tons. Around 250,000 tons more than last year. In addition, Pakistan’s cotton production in 2022/2023 is estimated by the United States Department of Agriculture at 1.35 million tons, an increase of 50,000 tons over the previous year. Although recent rainfall may still have a certain adverse impact on production, the specific damage situation is still unclear. It remains to be evaluated, and the current market is still optimistic about its total output. Therefore, the global total cotton supply in 2022/2023 remains optimistic.

This article is from the Internet, does not represent 【】 position, reproduced please specify the source.

Author: clsrich