Global Demand For Cotton Is Very Weak.

According to the latest projections of the US Department of agriculture, cotton consumption in China, India and Pakistan has been greatly reduced, and global imports have also dropped to the lowest level since 2008/09. This indicates that global demand for cotton is very weak, and the excess inventory of the world needs more time to digest.

From the US side, the export volume reduction this month surprised the market, and directly led to an increase in the US final inventory from 3 million 100 thousand packages to 3 million 700 thousand packages, while the initial inventory was 3 million 700 thousand packs, indicating that the US cotton inventory was basically not digested within a year.

From a historical perspective, cotton prices showed weak or interval consolidation during the year of the beginning of the US cotton futures and the end of the final inventory. The December 2015 contract and other cotton contracts were well illustrated.

US cotton stocks are hard to drop, and cotton prices are still lingering at more than 60 cents in the past year or so.

Factor.

The possible variable is that the current soil moisture may lead to a substantial increase in yield per unit area. The new cotton output in the United States may be up to 14 million bags, and the probability of such a case is not low. The US end inventory change trend in 2016/17 is still neutral, so that cotton prices continue to linger in the low position.

Another possibility is that new cotton sowing is unfavorable to the start of planting or adverse weather conditions occur during midsummer drought or harvest period. These may make cotton price rise to a higher level in the short term, but before the new cotton harvest, the increase in weather factors will not last. Cotton demand in the long run can not provide support for cotton prices.

From now on, the next year will be affected.

The factors are almost the same as in 2015. China's cotton reserves remain high, the US dollar remains strong, oil prices are still low, and terminal consumption is still cautious.

In short, the negative factors of the new cotton contract in 2016 are the same as those of the Chen cotton contract.

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On the other hand, NCC expects us cotton sown area to be 9 million 100 thousand acres this year, still at a low level, which is very similar to last year's situation.

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In the near future, the market rumors that China will throw the store again, and that the price of dumping and storage is likely to decrease substantially. This may be the inducement of the sharp decline in the price of China's cotton futures in the past month.

According to the latest analysis by the US Cotton Corp, because China's cotton imports have been greatly reduced, the price drop of China's dumping and storage will not have a direct impact on the market. The impact of low price dumping on China's cotton prices may be reflected in yarn.

Whether these reduced consumption is driven by domestic consumption (India and Pakistan) or export consumption (Vietnam), the decrease in China's cotton yarn imports will lead to an increase in cotton stocks outside China, which will determine the magnitude of the downward pressure on international cotton prices.

On the basis of the fundamentals, the US Department of agriculture forecast sixth consecutive reductions in global cotton production and consumption in February.

Global production was reduced by 172 thousand packages to 101 million 400 thousand packages, and consumption was reduced from 1 million 300 thousand to 109 million 600 thousand packages.

Since the first forecast issued in May last year, global cotton production in 2015/16 has been reduced by 9 million 900 thousand packages, a decrease of 8.9%, and the consumption volume has been reduced by 5 million 700 thousand packages, a decrease of 4.9%.

In addition, the import volume of Pakistan and India also decreased by 400 thousand and 100 thousand packages respectively.

Meanwhile, the US cotton export volume has been cut by 500 thousand packages, and cotton exports in Brazil, India and Pakistan have been cut by 100 thousand packages.

After this adjustment, the end of this year's global cotton inventories decreased by 1 million 200 thousand to 104 million 100 thousand bales, and inventories outside China increased, thus putting pressure on the market.

The forecast sharply reduced cotton consumption in China, India, Pakistan and Brazil, and the world's cotton imports also dropped to 35 million 100 thousand packs, the lowest level since 2008/09, mainly due to the sharp decline in China's import demand.

According to the forecast, China's cotton imports dropped by 500 thousand to 5 million bales.

Within four years, China's cotton import volume has been reduced by 19 million 500 thousand packages, which is equivalent to the sum of cotton production in the United States, West Africa and Australia this year.