Global Inventory Pressure, Big Cotton Prices To Rise Difficult

Recently, the US Cotton Corp released the November report that the world

It will take years or longer to digest. Huge inventory pressure will hinder the rise of international cotton prices.

The details of the report are as follows:

The US Department of agriculture's report in November revised the forecast data a lot. The global cotton production was raised by 52 thousand tons, and the global cotton consumption was increased by 37 thousand tons.

A series of cotton historical data in Burma has been adjusted to make its output, consumption and inventory reach the level of 2000/01, thus increasing the global initial inventory in 2014/15 by 54 thousand tons.

In early November, China's cotton policy reform was further clarified.

It contains details of support for cotton farmers in the mainland.

In 2014/15, cotton farmers from 9 main cotton producing provinces except Xinjiang will enjoy 2000 yuan / ton subsidy.

From the beginning of next year, the cotton farmers in the mainland will subsidize a certain proportion of the subsidy in the Xinjiang area, with an upper limit of 2000 yuan / ton.

Previous reports on cotton policy said that the amount of subsidy would fully inhibit the decline in cotton planting area outside Xinjiang in 2015/16.

From a global perspective, next year's cotton planting area is expected to be more complicated.

Since 2012/13, global corn and soybean prices have seen a marked decline.

The fall in the price of cotton competitive crops has reduced the possibility of a sharp decline in cotton planting area next spring.

However, the recent fall in cotton prices will also lead to a decline in cotton planting areas in some cotton growing countries.

Any fluctuations in the global cotton growing area will evolve into cotton price fluctuations.

However, the current record of the end of the global cotton inventory and the Chinese government's claim that it will be properly placed to ease the upward pressure on cotton prices will weaken the impact of planting area on cotton prices.

The biggest uncertainty this year is how much market share the cotton will take from the chemical fiber.

Globally, cotton prices can compete with polyester.

In China, although the price gap is shrinking, the cost of using cotton is still higher than that of polyester.

As China is the world's largest consumer of cotton and chemical fiber, the proportion of China's fiber consumption will affect the proportion of fiber consumption worldwide.

The quicker the recovery of cotton use in China, the faster the global cotton inventory will decline.

However, because China's end to end inventory consumption ratio is close to 165%, the end of the world inventory consumption ratio is close to 95%. Even if the cotton consumption increases substantially, the end inventory will still be significantly higher than the historical average in the next few years.

The recent rise is unlikely.