Analysis: Cotton Market Will Show V Trend In The New Year.

2010/2011 cotton year has quietly begun, looking back on the past 2009/2010 years, cotton price trend is magnificent. From last year's initial sale of new cotton to 12977 yuan / ton, it has climbed to a high level of 18419 yuan / ton in early July this year, the highest increase of 41.9%. The domestic cotton index increased by 34.85% in the current year, and the highest increase was 53.88% in the US cotton market.

The rare supply gap in 2009/2010 led domestic and foreign cotton prices in a typical bull market, which led to the whole cotton trade and textile industry flourishing. Because of the time effect of price transmission and the acceptance degree of industry chain to price, the trade and textile industry in the upstream of the industrial chain benefit significantly from the current cotton bull market, while the downstream weaving and textile clothing industry is in the average level in recent years.

In the end of the year of 2009/2010, the policy of national dumping and storage will be introduced timely, which will help ensure the smooth transition of new and old cotton, but this year's high cotton price will be transmitted to the new Hua Kai scale. We expect that the supply and demand of global cotton will remain in a tight balance in 2010/2011, and cotton prices remain high in the new year.

Global supply and demand pattern next year

Global supply and demand gap reduced to 778 thousand tons next year.

According to the US Department of agriculture's supply and demand report in September, the global supply and demand gap of cotton in 2010/2011 will be reduced by 2 million 717 thousand tons compared with this year. Despite the sharp decrease in its magnitude, the gap still exists. Many people in the market believe that the cotton market will probably repeat the mistakes of 2004/2005 in the next year, and there will be an accelerated decline after the 2003/2004 rise. But we can clearly see that the cotton price in 2004/2005 will fall sharply, which is caused by the high yield of cotton in the world, and the supply and demand environment of 2010/2011 is different from that of that year. The existence of supply and demand gap will drive the global inventory consumption ratio to continue to lower next year. Therefore, from the supply and demand environment, next year will not have the basis to promote cotton prices to fall substantially.

Specifically, there is a cotton supply gap for every cotton year after 2005/2006. This year, global cotton production is 22 million 23 thousand tons, consumption is 25 million 518 thousand tons, gap is 3 million 495 thousand tons, inventory consumption ratio is 40.1%, the next year is global. Cotton yield For 25 million 464 thousand tons, consumption is 26 million 242 thousand tons, the gap is 778 thousand tons, and the inventory consumption ratio is 37.7%, the lowest in 1995/1996 years. The lowest point since 1980/1981 is 29% in 1989/1990.

Both planting area and unit yield help to increase the output of cotton in the United States.

As cotton prices rose in 2009/2010, cotton cultivation in the United States increased significantly in the 2010/2011 year, 3 million 50 thousand hectares in 2009/2010 and 4 million 360 thousand hectares in 2010/2011, an increase of 42.95%. Moreover, the unit production in 2010/2011 is also at a relatively high level, with a total of 871 kg / HA in 2009/2010 and an increase of 8.04% to 941 kg / HA in 2010/2011.

2010/2011 cotton production increased by 1 million 448 thousand tons to 4 million 102 thousand tons in, an increase of 54.6%. It is expected to increase by 754 thousand tons, an increase of 28.8%. Inventory consumption ratio continued to decline to 14.1%, 2009/2010 19.4%.

In September 7th, the United States Department of agriculture's cotton production report showed that as of September 5, 2010, the United States cotton bolting rate was 41%, an increase of 12% over a week ago, an increase of 17% over the same period last year, an increase of 10% over the past five years. The cotton picking rate in the United States is 6%, which is 1% lower than that in the past five years. The growth rate of new cotton in the United States accounted for 60%, which was unchanged from the previous week.

India's planting area continues to increase, and output is expected to reach new heights.

According to the latest estimates of the US Department of agriculture, India, 2010/2011 cotton The planting area is expected to reach 10 million 700 thousand hectares, an increase of 440 thousand hectares compared with 2009/2010, an increase of 4.29%.

The yield per unit area is expected to increase by 30 kg / ha, reaching 529 kg / ha, an increase of 6%. The total output is expected to increase from 610 thousand tons to 5 million 661 thousand tons, an increase of 12%. India's domestic demand in 2010/2011 is estimated at 4 million 463 thousand tons, an increase of 217 thousand tons compared with 2009/2010, and exports expected to be 1 million 89 thousand tons.

Pakistan floods or new cotton production reduced by 380 thousand tons

In recent years, Pakistan has been relatively stable in planting area and yield per unit area, and its output has not changed much since 2005. It has been around 2 million tons. Shortly before, Pakistan experienced a rare flood disaster. The Pakistan textile mill Association estimated that the flood disaster or 380 thousand tons of cotton production in 2010/2011 will push Pakistan's domestic cotton prices and cotton imports next year.

In the latest forecast, the ICAC (International Cotton Advisory Committee) expects that Pakistan's cotton output will be about 1 million 900 thousand tons in the new year, and the disaster level of new cotton is expected to reach 6% to 8%, reaching a maximum of 15%. In the global cotton supply and demand forecast in September, USDA (US Department of Agriculture) is expected to be 2 million 25 thousand tons, with a disaster capacity of about 120 thousand tons.

Next year in China Supply and demand gap Continue to expand

According to the latest estimates by the US Department of agriculture, China's output is 7 million 76 thousand tons and consumption is 10 million 886 thousand tons in the next year, with a gap of 3 million 810 thousand tons, an expansion of 217 thousand tons over 2009/2010. China's import volume is expected to increase to 2 million 776 thousand tons next year. According to the August cotton production survey of China cotton information network, in 2010, China's cotton planting area was 78 million 30 thousand mu, with a total output of 6 million 980 thousand tons, compared with 2% in 2009.

According to the research center of China cotton storage information center, the delayed harvest of new cotton in most parts of the country has been foregone, which is delayed by 10 days, due to the influence of bad weather such as spring sowing low temperature and rainy weather in 7 and August. If the weather is normal in the late period, it is estimated that the new cotton yield will be increased by 90.44 kg / mu, 3.99% higher than the previous year. The area prediction is 77 million 843 thousand and 200 mu according to the May data, and the total cotton output is expected to be 7 million 40 thousand and 200 tons, an increase of 4.2% over the previous year, an increase of 0.94 percentage points over June.

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Fourth quarter domestic cotton supply or tight compared with previous years

Throughout the current cotton market, the pattern of supply and demand at home and abroad has changed considerably in recent years. On the whole, cotton consumption demand in China has been increasing steadily, and supply side, due to the rare supply gap in recent years in 2009/2010 and in the whole world, driven by the end of global inventory has dropped to the lowest level since 1994/1995, and domestic cotton stocks are running low. We expect that the supply of domestic cotton market will be tighter than that of previous years.

Demand for cotton is strong in the fourth quarter.

According to the US Department of agriculture data, cotton consumption in China in 2009/2010 is 1056 tons, the average in recent three years is 1041.47 tons, and the mean value in the past 5 years is 1038.56 tons, which is in a steady growth trend. According to the 5 year average, the monthly cotton consumption is 865 thousand and 500 tons. Moreover, cotton consumption shows strong seasonal characteristics. According to past experience, with the reduction of temperature and the approaching of the Spring Festival, the fourth quarter is the peak season for cotton consumption, and the monthly consumption can reach 95-100 tons. From this we expect that the total cotton consumption in 10-12 months will be estimated at 285-300 tons.

The supply pattern has changed in the fourth quarter of this year.

According to last year's experience, the supply of cotton from the above 3 million tons (cotton consumption in the fourth quarter) mainly came from the national dumping and storage, import, Xinjiang cotton listed foreign trade and real estate cotton processing and listing, but the current market supply pattern has changed.

First of all, from the perspective of state dumping, 320 thousand tons of dumping and storage in October 1, 2009 to October 30th (second cumulative dumping in October) were sold in 2009, and 507 thousand and 600 tons were dumped in November 20th to December 25th (third throw and storage), and the cumulative supply volume of the fourth quarter was 827 thousand and 600 tons.

This year, the state began to dump 600 thousand tons in August 10th and throw 15 thousand tons a day. It is expected that 570 thousand tons will be sold by the end of September, and only 30 thousand tons will be thrown into storage after October. Moreover, after the current round of dumping and storage, I understand that only about 600 thousand -70 tons of state cotton can be stored. Compared with last year, the supply of state reserves in the fourth quarter of 2010 will be reduced by 800 thousand tons.

Secondly, from the perspective of cotton imports, China imported 448 thousand tons of cotton in October 2009 -12, of which 86 thousand and 300 tons were imported from the United States, and 183 thousand and 200 tons were imported from India, and the import volume of other countries was below 40 thousand tons. In addition, from the import data in 2009 and the first half of this year, Uzbek, the third largest exporter of cotton, mostly concentrated on cotton exports in China from 1 to June each year, so the cotton imports to China in the four quarter are very limited. The US 2009/2010 end of the year inventory is only 653 thousand tons. Despite the large increase in cotton output this year and the new cotton sales in good condition, with the delay in acquisition, processing and shipping date, a large number of exports will wait until after January 2011. India's cotton exports are facing greater uncertainty. Although it will reopen cotton exports after October 1st this year, according to the news released by the Ministry of Commerce of India in August 28th, the government of India will first export cotton on the basis of domestic cotton production in 2010/2011, and must register with the textile Commission in advance. According to information from krub, the India cotton export registration in 2010/2011 will be postponed from October 1st (September 15th) to October 1st, which is consistent with the start date of shipment. A large number of cotton will be registered. The textile industry in India has made recommendations to the government to protect the domestic textile industry. It is hoped that the government will not liberalize cotton exports before the end of 2010. Meanwhile, the export volume of 2010/2011 will be limited to the 841 thousand and 500 tons that India Cotton Advisory Committee (CAB) forecast for export, rather than the 935 thousand tons announced before. India's export policy is changing. It is expected that the export volume of India cotton will be greatly affected in the four quarter.

Third, the bottleneck of Xinjiang cotton transportation is difficult to understand. Due to the early listing of cotton in 2009, as at the end of December 2009, the total amount of Sinotrans cotton transportation is about 1 million tons, and the average daily shipment of cotton is 200 to 230, which can transport about 9000 tons a day. As cotton planting is generally postponed for about 10-15 days this year, the harvest period will be postponed backwards, and the time of outward shipment of Xinjiang cotton will be delayed. In addition, due to the arrival of new year's day and the Spring Festival, passenger traffic will increase at that time, which will be extremely unfavorable for cotton outward shipment. Therefore, by the end of December this year, the supply of Xinjiang cotton will be less than that of last year, and the expected impact will be more than 100 thousand tons.

Fourth, the supply of real estate cotton continued to decline. From the following table, since 2000, the proportion of cotton output in Xinjiang has increased gradually from the 32.96% in 2000 to 40.39% in 2008. The proportion of real estate cotton output has decreased year by year. In addition, the real estate cotton is also facing the problem of delayed planting due to the late sowing of cotton. It is expected that a large number of harvest will be delayed 7 to 10 days.

Fifth, farmers are reluctant to sell their spirits up and artificially postpone the listing of new cotton. Because of the decline of cotton planting area and the low price of grain and cotton, cotton growers have higher expectations for new cotton prices this year in the face of the soaring cotton prices in 2009/2010. According to the author's previous investigation in Shandong and Henan, the price of seed cotton is expected to be 4 yuan / Jin - 4.5 yuan / Jin, and 5 yuan / Jin in some areas. And from last year's experience, the higher the selling profit is, the more it is expected that the cotton farmers will sell more this year. As a cotton processing enterprise, if the price of seed grade 328 cotton is 18500 yuan / ton, the price of seed cotton is about 4.2 yuan / kg, if processing is higher than 4.2/ Jin, the processing enterprise will lose money. It is estimated that the game between cotton growers and processing enterprises will be intensified after the new cotton is listed, and the processing enterprises will also cautiously purchase the new cotton market. From the current purchase situation of Hubei, Anhui and other places, the listed cotton grades are mainly 4 and 5, and the purchase price is around 4.1 yuan / Jin.

In addition, from the cumulative year-on-year fixed investment actual position of textile industry, the textile industry's capacity has expanded into the expansion channel since the economic crisis. In the second half of 2009, the cumulative annual growth rate of investment was about 10%, and the cumulative growth rate in the first half of 2010 was around 20%. Textile production capacity will continue to increase, and the situation of increasing demand for money will continue to intensify. Competition for limited resources will also intensify further, which will also provide cotton prices with a driving force.

Judging from the beginning of the new year, the high cotton price in 2009/2010 has been transmitted to the new flower Kai scale. In the late stage, the new cotton market will gradually improve domestic supply and demand pattern, and cotton prices are expected to fall. However, due to the limited domestic output and the reluctant sale of cotton farmers and other factors, the spot cotton prices are hard to fall. The specific extent of the market fall will depend on the output of cotton both globally and domestically this year. Therefore, the cotton weather in the next few weeks is still the focus of our attention. As China's next year's gap continues to enlarge and imports will increase correspondingly, the impact from the international market will also gradually strengthen. It is expected that before the listing of cotton in India, the US cotton will dominate the global cotton export market.

According to the US Department of agriculture, the global cotton gap in the new year has narrowed considerably from 2 million 717 thousand tons to 778 thousand tons in the new year, and the world will be in a tight balance. It is widely expected that the price of new cotton will be high and low after the listing, and the bottom of the market is expected to be in the December when a large number of new flowers are processed and listed. With the gradual consumption of cotton in the late part of the year, the gap effect will gradually appear, and cotton prices are expected to rise steadily. Overall, cotton will remain at a high level in the new year and is expected to refresh its record highs.