US Cotton Stocks Increase, New Cotton Planting Backward

According to the US Department of agriculture's global production and demand forecast for May, the US cotton production decreased by 14 million 800 thousand packages in 2016/17, resulting in a significant increase in final inventory.

Output is expected to grow by 15% compared with the same period last year, while domestic consumption will be maintained at 3 million 600 thousand packages, and export volume will be increased to 10 million 500 thousand packages. The final inventory is expected to be 4 million 700 thousand packages.

The average annual farm price is 47-67 cents.

In 2015/16, the output of US cotton increased slightly, the export was reduced to 9 million packages, and the final inventory increased accordingly.

Tight spot resources and strong prices are the main support of Zheng cotton. The sale of national reserves has shrunk and the progress of domestic cotton inspection and data consolidation has been slow due to the end of the sale of imported cotton. In the future, the dumping schedule is difficult to improve. The overall market will be in a tight supply and demand pattern, and the spot market will remain strong and continue to consume.

Tight resources may result in tight 1609 contract warehouse receipts, thus supporting the price. At present, the new cotton quotation is 13000 yuan / ton, and the next 1609 contracts are expected to close to the spot.

But on the other hand, the increase in the number of reserves in the coming year is ahead of schedule. At the same time, the market has asked the government that additional 80-100 million processing trade quotas may be pressure on domestic cotton prices. Under these circumstances, the 1701 contract will be under increasing pressure of selling and selling, and the price will remain weak.

It is suggested that investors shift their trading focus to the 1701 contract, keep the idea of the 1701 contract empty, and continue to increase the value of the contract and maintain the value of the contract, so that they can hold 1609 of the contracts and sell 1701 contracts.

Globally, global cotton inventories fell by more than 6 million packages in 2016/17.

Output exceeded production in second consecutive years.

Global cotton production is expected to grow by nearly 5%, and the increase in Pakistan, the US, India and Turkey will partly offset the 1 million 300 thousand decrease in China's production.

Global consumption is expected to grow by 1.6%, because cotton prices remain low and China's domestic cotton competitiveness increases.

Global cotton imports are expected to decrease year-on-year, with a final inventory of 96 million 500 thousand packages and a stock consumption ratio of 87%.

Inventories in China dropped more than global inventories, while inventories outside China increased slightly.

Nevertheless, China's inventory consumption ratio is still up to 170%.

New flower planting in the United States is lagging behind and the export progress is good.

As of May 23, 2016, the US cotton sowing rate reached 46%, down 1 percentage points from the same period last year, which is 8 percentage points lower than the same period in the past five years.

In the latter part of the United States, the weather and rainfall conditions in all cotton producing areas were ideal, and soil moisture and irrigation water were adequate, suitable for cotton seeding.

As of May 12th, the net contract volume of US cotton reached 1 million 926 thousand tons in 2015/16. The gap narrowed to 500 thousand tons, a decrease of 21%, and 97% of USDA export forecasts, down 98% from the same period last year.

The total shipment volume of cotton reached 1 million 466 thousand tons, a decrease of 417 thousand tons compared with that of the previous year, a decrease of 22%, and the completion of the USDA export forecast of 74%, down from 76% in the same period last year.

The total contracted volume of cotton reached 280 thousand tons, up from 275 thousand tons in the same period last year, and finished 12% of USDA's export forecast next year, down from 14% in the same period last year.