Analysis Of Cotton Price Trend In 2016

In 2015, domestic cotton prices fell slightly, while futures prices fell much more than spot prices.

Looking at the 2015

Industry, due to long-term huge inventory and weak downstream consumption, leading to Zheng cotton has been running in a relatively low position, it can be seen that the huge inventory of cotton and pessimistic consumption is the intrinsic factor of the fall.

New cotton supply increased slightly

Cotton production in China decreased significantly in 2015/16. According to USDA12 monthly report, China's cotton production in 2015/16 reached 5 million 291 thousand tons, a sharp decrease of 19% over the same period last year.

In November, the China Cotton Association forecast that cotton production in China was 5 million 277 thousand tons in 2015/16, a decrease of 18.8% over the same period last year.

The report released in December predicted that cotton production in China in 2015/16 was 5 million 10 thousand tons, down 20.3% from the same period last year.

As of December 16, 2015,

The total amount of cotton processed in the region is 3 million 272 thousand tons, of which the processing capacity of local enterprises is 2 million 5 thousand tons, and the processing capacity of the Corps is 1 million 268 thousand tons. In the same period of 2014, the total processing cotton volume was 3 million 504 thousand tons.

As of that day, Xinjiang cotton was 3 million 79 thousand and 600 tons.

The inspection volume totaled 3 million 134 thousand tons nationwide. The inspection volume of local enterprises in Xinjiang was 1 million 653 thousand tons, and the inspection volume of Xinjiang Corps was 1 million 327 thousand tons.

Most of the ginning plants will finish processing tasks by the end of December, with the daily processing capacity of about 13 thousand tons, and predict that the output of Xinjiang cotton will reach 3 million 500 thousand ~370 million tons in 2015/16.

The cotton production in the mainland is between 1 million ~120 tons, which is a relatively recognized figure. Therefore, it is predicted that the lint yield in China will be between 4 million 500 thousand ~490 tons in 2015/16.

For the cotton production in 2016/17, it is expected that the planting area in the mainland will continue to decrease, but the cotton planting area in Xinjiang will maintain or decrease slightly. In terms of output, if the weather in 2016 did not encounter the weather like 2015, the output of cotton in Xinjiang would be higher than that in 2015.

Overall, China's cotton output is expected to maintain or even increase slightly in 2016.

In 2015, the NDRC stated that in addition to undertaking the quota of 894 thousand tons of cotton imported from WTO, the import quota was no longer issued. Therefore, the cotton import volume dropped sharply in the past year.

Especially after August, the quota of enterprises is very small, so the import volume of cotton in the latter few months has plummeted.

Even cotton entering the bonded area has been pferred to other Southeast Asian countries because of the absence of quota clearance.

According to the statistics of the Chinese customs, the total import of cotton was 1 million 285 thousand tons in the first 11 months of 2015, a decrease of 44.8% compared with the same period last year. Since 2015/16, China has imported 178 thousand tons of cotton, a decrease of 40.2% compared to the same period last year.

The national development and Reform Commission said it will continue to consume domestic cotton stocks in 2016, and the quotas for imported cotton will be issued to those textile enterprises that really need to avoid quotas in the market.

Therefore, it is estimated that the imported cotton shape will be the same as in 2015 in 2016. And with the reduction of the difference between the inside and outside cotton prices and the structural shortage of cotton this year, the imported cotton will be dominated by high-grade cotton, Australian cotton and Brazil cotton in 2016, and the import volume of India cotton will be further reduced.

In 2015, due to the global economic weakness, insufficient demand in the international market, further weakening of China's traditional competitive advantage and intensified trade frictions, the total export volume in the first 11 months of the year dropped by 2.2%.

As a traditional export product of our country, the total export of textiles and clothing was 257 billion 26 million US dollars in the first 11 months, down 5.79% from the same period.

Among them, the total export of textiles was 99 billion 760 million US dollars, down 2.6% compared with the same period last year, and the total export volume of clothing was 157 billion 267 million US dollars, down 7.71% compared with the same period last year.

The export situation is not good, the order volume falls, on the one hand is affected by the global economy weak, the demand is weak, especially the European Union and Japan's economic slump, which accounts for nearly 30% of China's textile and garment industry's export share, China's orders have been greatly reduced; on the other hand, there are also reasons for the international pfer of orders.

Due to the weakening of the price advantage of China's labor-intensive industries, some overseas orders are pferred to emerging economies such as Vietnam, India, Indonesia and Kampuchea with lower labor costs, especially in the clothing industry.

The adoption of the p Pacific (601099, stock bar) partnership agreement (TPP) will also have a great impact on China's textile and apparel industry.

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In 2015, imported cotton yarn continued to impact on the Chinese market. Although cotton prices in China have dropped sharply in recent years and the difference in cotton prices between domestic and foreign countries has been narrowing, India, Pakistan and Vietnam still sell large quantities of cotton yarn to China through reducing profit margins.

In the first 11 months, China's total imports of cotton yarn nearly 2 million 160 thousand tons, an increase of 19.7% over the same period, and the total import volume is expected to be over 2 million 300 thousand tons.

Imported cotton yarn has been squeezing Chinese cotton textile market in recent years due to its low raw material cost advantages and processing cost advantages, especially Vietnam. In recent two years, a large number of large textile factories in China have invested and built cotton yarn in Vietnam, and then sold cotton yarn through its mature sales channels in China, so the amount of Vietnamese cotton yarn imported by China has increased significantly.

Although the amount of imported cotton yarn is preempting the Chinese market, we also need to see that China's cotton textile industry is still difficult to be replaced by Southeast Asian countries with its superior downstream production chain and mature technology, especially in the weaving industry with high technology content. This situation is particularly evident in Vietnam. Although Vietnam is a large producer of clothing, grey cloth is a major bottleneck in the country. It needs to import a large amount of grey cloth from China to meet the downstream needs every year.

In addition, with the gradual production of textile factories in Xinjiang, the price of Xinjiang cotton yarn is also very competitive for imported yarn because of various subsidies provided by the government.

Moreover, with the tax reform and power reform in Central China in 2016, the disadvantages of Chinese textile enterprises may be gradually reduced.

Global demand for cotton is weak

In 2015/16, global production decreased significantly, consumption increased and inventories decreased.

The world's major cotton production has declined, with China, Pakistan and the United States reducing production considerably.

Consumption in China and Pakistan has declined in global consumption, while consumption in Vietnam, Bangladesh and India has increased significantly.

Inventories in China and India declined significantly in global inventories.

The US Department of agriculture's December report showed that global cotton production fell to 22 million 580 thousand tons in 2015/16. Compared with 2014/15, global production decreased by 3 million 354 thousand tons, or 13%.

The global cotton production volume was adjusted to 24 million 252 thousand tons, compared with 2014/15, the global output increased by 200 thousand tons.

Global inventory dropped to 22 million 729 thousand tons, compared with 2014/15, global production decreased by 1 million 659 thousand tons, a decrease of 6.8%.

With the sharp reduction in China's quota and the fall in domestic cotton prices in 2015/16, China's cotton import volume has been greatly reduced and the international cotton price has been suppressed.

At the same time, other countries in Southeast Asia, such as Vietnam, Indonesia and Pakistan, have increased their imports of cotton.

Mexico and Vietnam increased their purchases of US cotton, while Pakistan suffered heavy losses due to floods in some cotton areas and increased procurement of India cotton.

It is expected that cotton prices will gradually shrink in 2016 as cotton prices fall.

Under the control of import quota, the amount of cotton imported by China as the largest consumer of cotton will not differ from that of 2015.

Therefore, in 2016/17, the pressure of global cotton sales is still decreasing, and the international cotton price is also hard to rise.