Global Cotton Consumption Has Come Down

Consumption continues to slump, cotton will fall rapidly, Zheng cotton will continue to be weak.

Although the six major central banks jointly cut interest rates and China lowered the deposit reserve ratio, the US stock market rose.

Next year

On the macro side, China's economy is facing a crossroads, economic pformation and China's turning point. Next year, the economy will be soft landing in pition, and growth will be slowed down simultaneously with inflation.

There are four characteristics of pformation: the deviation between macro data and micro level; the change of production function and potential growth rate, the decline of economic growth, the long-term inflation of institutional inflation, the shift of inflation center, and the change of policy logic, from macro regulation to structural adjustment.

From a historical perspective, similar pformations took place in China between 1996 and 1998 and 2005 to 2006.

The problem is how to get rid of the old cycle and stride into the new cycle, which requires policy and economic adjustment.

Wang Qishan, vice premier of China, said last week that the global recession is very long and the actual situation may exceed people's expectations.

In this statement, OECD and Morgan Stanley lowered the forecast of global economic growth in 2012.

If the global economy continues to cool down, the demand for commodities such as cotton will inevitably weaken.

From this perspective, cotton prices will remain weak from now until 2012.

Global cotton consumption has come down

From the perspective of China's domestic supply and demand, China's domestic business inventories were about 1 million 500 thousand tons at the end of November, and the total import volume was about 3 million tons in 2011, and China's output was estimated at 7 million 320 thousand tons. The new quota has not yet been issued this year. At present, it is still using the 1 million 500 thousand tons of quasi tax quota issued earlier.

The 894 thousand tons 1% tariff quota issued last year will be available in February next year, and the 1% tariff quota for this year's 894 thousand tons will be issued in December.

According to China's estimated consumption of 9 million tons, if the domestic storage is below 2 million tons, the market will be bearish after March, and if the reserves are close to 3 million tons, the market surplus will be totally digested by the national reserve.

Of course, the new import quota is also a key variable that will affect the domestic cotton price trend after next March.

At this stage, the global consumption of cotton has been declining, and the driving force for its rise is obviously insufficient.

The situation of major textile producing and consuming countries in Asia has further deteriorated.

In recent months, Pakistan's exports of cotton yarn were only 40 thousand tons, a new low of more than 10 years. The shrinking foreign demand and the tight domestic energy supply led to a sharp decline in textile production and exports, and this year the cotton consumption decreased by 57.5% simultaneously.

In recent months, Thailand's cotton imports have also decreased by 36.8% over the past few months due to the downturn in textile demand.

South Korea's cotton imports continue to slide under the influence of strong cotton prices and sluggish demand.

In fact, we expect that China's cotton reserves will soon be thrown away after the domestic cotton price rises 2000 yuan / ton, which will no doubt suppress the impulse of market rebound.

According to our survey of 50 cotton spot enterprises and 20 futures investment institutions, the industry is generally cautious and pessimistic after March next year. Most of the futures speculation funds are full of expectations for Zheng cotton intermediate rally.

The author believes that when the macro atmosphere is warm, small rebounding is easy to happen, but when the warehouse cost area is above the cost, the market will become the norm. When investment capital starts to rebound, it is the best time for Cotton Traders holding cheap foreign cotton or domestic resources to sell.

Maintaining weakness, cross market arbitrage is highly operational.

Since November, although the purchasing and storage policy has been supporting the domestic cotton price, the global economy is getting cold, consumption is still in a slump, sales of textile and clothing are not good, and cotton prices are falling rapidly.

At present, domestic and foreign market spreads show that cross market (import) arbitrage is highly operational.

With futures prices approaching 19500, market rebound is expected to start brewing.

In domestic stock, domestic futures, foreign long-term and foreign spot, imported cotton companies often choose the lowest price foreign long-term cotton orders, collect resources, and gain profits from different markets at home and abroad through import trade.

From the perspective of State purchasing and storage, the scale of foreign 1 million tons and more than 2 million tons of domestic storage will be realized. In the future, the extent of global macroeconomic improvement and the concentration of market resources will determine the rebound rate of cotton prices next year.