That week (August 15-19), the U.S. Department of Agriculture released its August production demand forecast report, which significantly reduced U.S. cotton production. ICE cotton futures rebounded sharply. Affected by this, domestic cotton futures first rose and then fell, and the price focus continued to rise. has moved, and the overall trend remains strong and volatile.
That week, the biggest bullish factor for the market was undoubtedly the August global production demand forecast released by the US Department of Agriculture. This month, the USDA reduced US cotton production by nearly 3 million bales. After the above adjustments, global production in 2022/23 will be reduced to 117 million packages, consumption will be 119 million packages, and the gap between production and demand will reach 2 million packages. Although the market has criticized the USDA for significantly reducing U.S. cotton production, the ICE market still jumped short and opened higher and closed to the daily limit.
U.S. cotton has regained more than 110 cents/pound, providing strong support to domestic cotton. However, Zheng cotton showed some hesitation. It first followed the increase and then continued to pull back. It was obviously strong externally and weak internally. Of course, Zheng Cotton’s relatively weak performance is mainly due to the considerable pressure on domestic supply and demand fundamentals. The latest purchase and sales data released by the National Cotton Market Monitoring System shows that as of August 18, the national sales rate was 67.9%, a year-on-year decrease of 31.8 percentage points, of which Xinjiang sales were 65.2%, a year-on-year decrease of 34.5 percentage points; the cumulative sales of lint cotton nationwide were 3.939 million tons. , a year-on-year decrease of 1.993 million tons, of which Xinjiang sales were 3.433 million tons, a year-on-year decrease of 1.805 million tons. Regardless of sales progress or sales volume, Xinjiang cotton sales data are significantly behind the same period in previous years.
That week, the industrial inventory report released by the National Cotton Market Monitoring System showed that in early August 2022, the company’s operating rate was 68.5%, a decrease of 7.0 percentage points month-on-month and a year-on-year decrease of 25.2 percentage points. The enterprise’s yarn production and sales rate was 89.8%, an increase of 1.7 percentage points month-on-month and a year-on-year decrease of 3.6 percentage points; the cloth production and sales rate was 85.5%, a month-on-month increase of 2.5 percentage points and a year-on-year increase of 0.7 percentage points. Although the production and sales data of downstream companies have improved, the recovery of consumption is weak and still falls short of expectations.
The new cotton year is about to enter. Under the premise of slow digestion of cotton stocks and an expected increase in the output of new flowers, the pressure on the cotton market still cannot be underestimated. The support of US cotton for Zheng cotton may become weaker and weaker as new flowers come on the market. .
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