Morgan Stanley'S Growth In Consumption Is Weak And Cotton Prices Are Rising Too Fast.

According to the latest analysis report, the current international cotton price is still constrained by China's reserve cotton policy.

Before the sale of China's cotton reserves, the international cotton prices will not fluctuate at present prices.

From the supply side, the US planting area decreased by 15% over the same period in 2015/16. Although the drought in the southern part of the United States has been alleviated, the rate of abandoning is still very high, and the prospect of yield per unit area is not optimistic.

The biggest drop in global output since 2008 is expected to reduce record global stocks slightly, but inventories are still far above the long-term average, thereby limiting the price of cotton.

In terms of demand, international oil prices have fallen sharply since the fall of 2014/15.

Prices remain at a low level, and cotton demand growth is facing great challenges.

Because of the low price of chemical fiber, China's domestic cotton consumption is still in a downward trend. Cotton imports in 2014/15 have decreased by 40%, and the inventory consumption ratio is still close to 200%.

In the long run, cotton consumption will continue to be driven by rapidly growing textile giants such as India, Vietnam and Bangladesh.

Morgan and Stanley believe that the sales of China's reserve cotton have not been peg at all, and have not brought a significant impact on the market, so they hold a neutral attitude towards the cotton price trend.

Compared with the past,

It is no longer as heavily reliant on China's consumption and imports as it once was.

On the day of the USDA report, the price of ICE futures was a blockbuster, but only 30% of US cotton exports in 2014/15 were dependent on China. The performance of cotton prices is not consistent with the actual situation.

Cotton prices will not rise too fast before China's massive digestion of reserve cotton.

Morgan and Stanley pointed out that the recent devaluation of the renminbi has triggered a shock in the market, and the market is worried about the growth of the demand for commodity exports. But in fact, this short selling sentiment is overdone, because the devaluation of the people has different effects on commodity futures.