2016 What Will Happen To US Cotton Exports?

According to the statistics of USDA, from 2008 to 2014, the US cotton exports accounted for 82% of the total cotton output in the United States, of which the total export volume in 2009 accounted for 95% of the total annual output.

Separately, China, Turkey, Mexico, Vietnam, Indonesia, Pakistan, Thailand, South Korea and Peru are the main export places of the United States cotton.

From 2008 to 2014, China's share in the US cotton export market was 30%, 30%, 32%, 53%, 39%, 21% and 34% respectively.

China is the most important market for us cotton. From 2008 to 2014, China has been the largest market for us cotton exports.

Considering the characteristics of US cotton exports showing a decline in total volume, slow progress in signing contracts, and a marked decline in China's contracted volume in major markets in the year of 2015/2016, it is difficult to achieve the target of 2 million 177 thousand tons of US cotton export volume set at USDA. Later USDA may reduce the number of US cotton exports in subsequent monthly supply and demand reports.

The overall fluctuation range of ICE cotton will be narrowed, but uncertainty will increase the short-term volatility of ICE cotton.

November and December each year are the peak of the US cotton export contract. ICE cotton price usually has a low level in 10 and November. After that, with the speed of export signing up, the price of cotton futures is rising.

By the end of February of next year, the signing of the US cotton export contract had finished more than 85%, and the overall focus of the ICE price fell down.

By July, the possibility of ICE contract oscillation going down this year is more likely.

Over the past seven years, the monthly performance of China's signing of the US cotton rhythm and ICE cotton has been highly consistent.

This is closely related to the characteristics of China's signing of the US cotton: China occupies the US cotton export market.

The demand for Chinese market directly affects the total export volume of the US cotton in that year. China's time for signing the US cotton is concentrated in November to February of next year, and the shipment time is more than 12 months after signing the contract. The proportion of China's US cotton purchase ahead of schedule is 30%, which accounts for only 30% of the total. The ratio is lower than the average pre sale ratio of the US cotton contract. The proportion of Chinese cotton signed by the United States is quite high under the government's leadership.

In 2014/2015, US cotton exports showed some new characteristics, which also had an impact on the ICE cotton trend.

First, China signed a significant decline in the proportion of US cotton.

Due to the major adjustment of China's cotton import policy, in addition to 894 thousand tonnes of tariff quotas, the quota of imported cotton will no longer be added in principle on the basis of ensuring the supply of real demand for textiles.

In addition, the price gap between inside and outside cotton has also been narrowed.

USDA's latest US cotton export data show that as at the beginning of December 2015, China signed only 42 thousand tons of cotton in the United States, down 85% from the number of cotton signed in the same period last year.

China's signing of the US cotton ratio has also shrunk from 18% in the same period to 4% in the same period.

Two, the US cotton export contract is lagging behind the same period in previous years.

Up to the beginning of December, the United States signed 1 million 54 thousand tons of upland cotton, down 32.4% from the same period last year. Even considering that the total output of US cotton is expected to be reduced by 20% over the previous year, the number of US signed exports of Upland Cotton accounts for only 48% of the total expected annual export volume, still far behind the average 67% of the same period last year and the average progress of nearly seven years, which is only slightly higher than that of 2009/2010.

From the reasons behind the progress of signing contracts, the main reason that the main importing countries in the year of 2014/2015 were to place 2015/2016 in the annual order of US cotton is the main reason.

According to statistics, at the beginning of 2015/2016, the progress of US cotton export signing was only 26%, compared with 44% in the same period last year, averaging 38% in the past seven years.

Lag behind in signing the contract.

The impact of exports, the same year as the signing of the 2009/2010 is relatively backward, the signing of the initial volume of the year is only 22%, but in the next few months, the number of contracts continued to increase, to the end of May next year, the total contract volume has basically reached 100% of the annual export volume, only because the signing time is relatively late, although the export contract nearly 3 million tons of upland cotton, but nearly 400 thousand tons were not shipped in the year.

Three, the number of Mexico signed us cotton has suddenly increased.

Main cotton

The number of contracts in China dropped by more than 85% in the middle of the year. The number of contracted cases in Turkey and Indonesia dropped by more than 40% compared with the same period last year, while that in Korea dropped by 27% compared with the same period last year, and Thailand dropped 18% compared to the same period last year.

The number of contracts increased more than last year in Mexico. With the overall backwardness of the US cotton export contract, the number of contracted Mexico reached 211 thousand tons, an increase of 30 thousand tons compared with the same period last year, an increase of 15.9%, and a 8.4 percentage point increase in the US cotton export contract to 20%.

In addition, the number of contracted contracts in Vietnam and Bangladesh increased significantly over the same period, and the market share expanded by 6.5 and 1.3 percentage points respectively.

And there are news that Vietnam and Bangladesh signed an increase in the number of US cotton and textile enterprises in China to increase investment in textile production capacity, local textile enterprises actually ordering a small number of cotton.

To sum up, the rhythm of the US cotton export contract has an important impact on the price of ICE cotton, of which the rhythm of the US cotton export contract determines the stage ICE price level and the fluctuation range.

In the general year, the US cotton entered the peak of export contract from November to February of next year, and cotton prices rose more and more steadily during the period. However, the cotton price dropped later because of the decrease in the number of Cotton Traders selling and protecting the stocks.

However, if the export rhythm of the US cotton is relatively backward, it will cause more uncertainty to the ICE Market: first, the cotton price increase or lower than expected at the peak of the contract period; two, after 3, 4 and May, if the progress of the US cotton export contract continues to increase significantly, the cotton price will drop more space; the three is the signing of the US cotton market in Mexico this year. If the country continues to maintain a higher US cotton contract volume, it will reduce the adverse impact of the sharp decline in China's contract volume, but if the subsequent signing of a large number of cancellations in the United States has accelerated, the cotton price will fall down in the ICE period.