The Past And Future Of The International Cotton Market

In 2011, world cotton prices experienced a long run and then fell back. According to the report of Plexus, the United States textile world, last year, the total output of cotton in the United States reached 1 million 300 thousand bales, and exported 640 thousand large packages, of which China accounted for the overwhelming majority of imports. The total sales volume of US cotton has reached 9 million 500 thousand bales.

　 Record high yield

according to US Department of Agriculture (USDA) the latest data, in addition to other countries in the United States, cotton production exceeds 100 million bales, far exceeding the 2006 - 2007 87 million packets, and because of the slow growth of the world economy and the substitution of man-made fibers, the world's textile industry needs about 110 million bales of cotton fiber. The reason for the price rise last year is that the world market has a deficit of 13 million packages.

　 White hot competition

Because of the self-sufficiency of other countries in the world, many cotton mills are afraid that the world's cotton sales will be exhausted. The US cotton sales have fulfilled the task of 9 million 500 thousand packages ahead of schedule. However, China's cotton has become the mainstay of the world market, and it has effectively stabilized the international and domestic markets. Last year, China's cotton store effectively launched 2 million 700 thousand bales of cotton, which played an effective stabilizing role in the market price.

　 Lower price

In December 1st last year, the US cotton futures price dropped sharply from 96.48 to 91.30, prompting cotton prices to fall to a 14 month low, thanks to strong US export sales. In the 3 week period, the US import and export volume amounts to 2 million 500 thousand bales.

　 Cancellation of contract

The US cotton exports reflect the market trend, and the cotton sales index of the United Kingdom and the United States also reflects the market trend. There is no doubt that the sales of cotton in Pakistan, Turkey and South Korea have declined since the growth of cotton sales in China. The last week's delivery rate was negative last year, the lowest frequency since 2000.

　　 China is the mainstay of cotton prices.

Fortunately, Cotton storage in China Playing a huge role in import and export and domestic supply, they basically act as a lever for cotton prices. Today, China's cotton reserves are controlled by 5 million packages in the domestic market, and at least 4 million packages are controlled in the international market. China's cotton reserves as an international hedge force have played a role, especially in the unstable market since the summer of 2010.

　　 Business opportunities brought by falling prices

The cotton prices in China and the international market are swaying and there are obvious differences between them, which has brought great business opportunities to the world and Chinese cotton merchants. The huge price difference makes the futures business profitable.

In December 8th last year, the British cotton company reported that the New York index was unilateral, while China's cotton reserves increased by 1 million 100 thousand. Since October last year, the net reserves for the first time amounted to 6 million bales, equivalent to 18% of China's total output.

　 Price drop cotton spinning breathing

Because of the role of China's cotton reserves, cotton mills worldwide have been given a breathing space and their production profits have gradually returned to normal. However, many textile companies are still digesting the high cost of high prices in the past. It takes a long time to get back to normal. In 2012, how will the world cotton prices move? The industry will wait and see.

　　 Shake the world market

After witnessing the roller coaster like ups and downs in 2010 - 2011, cotton cultivation has made huge profits, which has greatly stimulated cotton production. The cotton growing area in the world has increased greatly. However, although the world's cotton production is looking forward to growth, the cotton market may experience setbacks. The growth of cotton fields in Dezhou alone reached 7 million hectares. It seems that American cotton merchants still expect huge profits in 2011. Because they have seen through cotton futures that in the new year, the world economic situation is not optimistic. First of all, the weak performance of the US futures index and the large number of default of options have almost brought about the collapse of the US cotton in the past 50 years. The default of cotton futures has not only shaken the long term US cotton system, but also shaken the world's cotton market.

Another phenomenon is that a large number of cotton mills in Asia value short-term effects, and they are very short of capital turnover. Not only are they worried about the consequences of the asset loading table, but also the revival of man-made fiber and the soaring prices of cotton are catching up with cotton. This shows that the man-made fiber market is reviving.

Despite the negative effects, international demand for cotton remained strong in 2011 - 2012, and inventory in the US was digesting last year. With the cancellation and default of many contracts, the export potential of the United States is being suppressed and prices will have to fall back.

With the gradual entry of raw cotton into the market, world cotton production may have eclipsed the market in 2012. The following factors have shown that cotton prices will continue to fall.

In 2012, the national development and Reform Commission (NDRC) formulated a new development plan. According to the relevant data, China's cotton consumption in 2011 and 2012 was 45 million bales, which is lower than that of last year. Most market observers and analysts in the world predict that the 2012 economy of the United States may repeat the withdrawal of 2008. The high consumption of Asian countries in 2012 may bring the high starting point of the United States, and the result is a rapid decline. After the economic crisis of 2008, the Federal Reserve's monetary policy changed, coupled with the climatic conditions that damaged the cotton fields in the United States and failed to harvest cotton. It was difficult for the United States to find customers as big as China, unless the world market consumption increased to 114 million ~1.18 billion package according to the prediction of the US Department of agriculture.

According to the forecast of world cotton market demand in October last year, the world's cotton market will reach 124 million packages. But if China's market is weak, it will bring disastrous consequences to the whole world market.

　　 Outlook 2012 The price of cotton per pound is expected to remain between 90-104 cents. But if Dezhou continues to suffer disasters, the reduction of cotton production is inevitable. The price trend in 2012 may be underestimated. The international cotton advisory board (ICAC) estimates that world demand for cotton will be reduced by 2%. According to the agency's forecast, the world's cotton output will increase by 8%, compared with last year, a net increase of 26 million tons, and consumption may be reduced by 2%.

China has created a national cotton storage company, and its consumption will account for 40% of the world's total output based on its average daily purchases. In fact, China's cotton store has purchased 1 million tons of non Chinese cotton. The shipment will arrive in China within the next few months.