Global Observation: The International Cotton Market Remains Weak, And The United States Textile Importing Countries Continue To Weaken

Recently, the weekly signing of American Cotton has improved. As of the week of January 19, 48500 tons of American cotton were signed weekly in 2022/2023, with a weekly increase of 2%, including 13400 tons signed by China and 12500 tons signed by Turkey; In 2022/2023, the export shipment of American upland cotton will be 39900 tons, a weekly decrease of 4% and an increase of 24% over the average level of the previous four weeks, including 12900 tons in China and 9200 tons in Pakistan. Although the weekly contract signing data of US cotton has improved, it is still weak year-on-year, and the US cotton balance sheet is still better than the global cotton balance sheet. If the periodic export data preferences, cotton prices may appear strong market, but the global supply continues to loose, weak cotton textile demand and other factors will limit its height above.

In November 2022, the US textile and clothing imports reached 6.89 billion square meters, down 23.9% year on year and 11.7% month on month, the sixth consecutive month of decline. The import volume reached US $86.8, down 15.6% year on year. As the most important textile importing country, the import demand of the United States continues to weaken, with a sharp year-on-year decline. In addition, the domestic wholesaler base has a historical high, and the subsequent import demand rate continues to be weak.

The supply side of the world in 2022/2023 has not changed much. Pakistan's output is basically determined, and cotton acquisition is basically ended. According to the statistics of Pakistan Ginning Factory Association (PCGA), as of December 31, 2022, the total new cotton market volume in Pakistan in 2022/2023 has reached 715000 tons, a year-on-year decrease of 37.2%; India's cotton listing progress in 2022/2023 continues to be significantly slow. As of January 29, 2023, India's cumulative cotton listing volume in 2022/2023 is about 1.9951 million tons, which is about 1.4227 million tons less than the average annual value of three years.

On the supply side, the output of American cotton and Pakistan is basically determined, and India's listing continues to be slow, causing market concern. Although the market has reduced India's output, the cumulative listing gap is still huge year-on-year; More than half of Brazil's crops will be planted in 2022/2023, which is generally expected to be a high-yield year. At present, the supply side variables are mainly concentrated in India. On the demand side, the weak performance continued. The contract signing data of American cotton improved, but it was still weak on a year-on-year basis. Southeast Asian textile enterprises started at a low level, and American textile imports also continued to weaken.

Textile enterprise inventory is low

Zheng Mian kept rising after the end of November 2022, and the lowest value of 2305 contract fell to around 12200 yuan/ton. Supported by the cost of new cotton, demand recovery has become the main logic of trading. After the optimization of the domestic epidemic prevention and control policy, the upstream cotton processing and public inspection were significantly accelerated, and the gap between the same period last year and the same period continued to narrow. As of January 31, 2023, the total cumulative processing volume of lint in Xinjiang is 5011400 tons, a year-on-year decrease of 3.45%; Xinjiang cotton transportation also returned to normal, and the freight rate also fell; Downstream cotton yarn transactions and demand improved. Textile enterprises' cotton yarn inventory has dropped to a low level in the same period last year. However, due to limited order recovery, they are also cautious about cotton procurement. After the Spring Festival holiday, the first wave of epidemic impact in China has passed. During the Spring Festival holiday, residents' travel and consumption improved significantly, which also boosted market confidence to a certain extent, but the degree of improvement in final demand still needs to be verified.

In the international cotton market, the biggest variable on the supply side is still India's output. Global cotton textile demand may continue to be weak. The structural difference is that the US cotton balance sheet is still better than the global balance sheet. Therefore, the US cotton export demand is still the key to the short-term and medium-term price performance. After the optimization of domestic epidemic prevention and control policies, the main line of cotton trade gradually changed from the expectation of demand recovery to the situation of demand landing. The cotton inventory and cotton yarn inventory of textile enterprises were at a low level, and there was a certain demand for stock replenishment in the market, but the gray cloth digestion was significantly worse than that of cotton yarn. In the future, we need to continue to pay attention to the demand performance of cotton textile enterprises. In the short term, we maintain a strong view of Zheng Mian's oscillation.