What Exactly Is The World'S Cotton Market?

According to the forecast issued by the US Department of agriculture in July, the output of 16/17 was 22 million 327 thousand tons, 109 thousand tons reduced, 24 million 297 thousand tons of consumption increased, 220 thousand tons increased, 19 million 876 thousand tons of final inventory reduced, 749 thousand tons, and the consumption of inventories decreased by 3.86 percentage points.

Overall, the report is much more profitable.

In the US cotton market, USDA's domestic export volume increased to 2 million tons in 15/16's supply and demand report in July, which is consistent with our outlook.

The output in 16/17 increased to 3 million 440 thousand tons, which is in line with our forward-looking direction, but slightly larger.

In addition, USDA will increase the export volume to 2 million 500 thousand tons in the next year, which is beyond our expectation.

The increase in exports offset the pressure on the increase in production, and the inventory at the end of the year was slightly reduced from 43 thousand tons to 1 million 2 thousand tons.

Inventory consumption decreased by 3.94 percentage points compared to 30.46%.

Overall, the report is much more profitable.

At home, the output of 16/17 is expected to be around 4 million 500 thousand tons, USDA slightly higher than 4 million 681 thousand tons, consumption of 7 million 620 thousand tons, increase of 326 thousand tons, end of term inventory of 11 million 255 thousand tons, reduction of 654 thousand tons, and inventory consumption of 147.28% percentage points, down 15.5 percentage points.

For domestic cotton, the report is much more favorable, which is in line with our expectations.

In India, there is little change in data trimming.

The output of 16/17 is estimated to be 5 million 987 thousand tons USDA. We believe that there may be a downward trend in the latter stage.

With a slight decrease and a slight increase in exports, 2 million 490 thousand tons in the end of the year will be reduced by 11 thousand tons, and inventory consumption will be reduced by 40.55% percentage points, 0.11 percentage points lower.

In terms of cotton production, cotton production in 16/17 is estimated to be around 3 million 440 thousand tons compared with 640 thousand tons in the current year.

In July, the growth rate of new cotton increased significantly, but the excellent and good rate decreased slightly.

According to USDA's latest statistics, the new cotton flower bud 85% has increased by 8 percentage points from the previous week, 82% in the same period last year, and 46% in fruit set, an increase of 18 percentage points from the previous week, compared with 41% in the same period last year.

In terms of excellent and good rate, 87% of new flower growth was normal (excellent 9%, good 43%, general 35%); abnormal ratio was 13% (poor 10%, very poor 3%).

On the export side, the annual output of the US cotton 15/16 is 2 million 800 thousand tons, domestic consumption is only 800 thousand tons, and the remaining 2 million tons are used for export. Therefore, the export report of the US cotton has a significant impact on the ICE cotton.

So far, the United States

The export task has been overfulfilled in the year, but the progress of shipment is slightly slower than in previous years.

The export volume of USDA increased to 2 million 500 thousand tons in the next year, which is beyond our expectation.

In July, the US cotton export sales maintained a good trend, but it has dropped slightly recently.

The latest sales report shows that 7.15-7.21 has signed a net US contract for exporting 10115 tons of land cotton this week, down 38% from last week, 54% less than the four week average, and 41164 tons, 41164 less than last week, 17% less than the four week average.

Since the beginning of this year, AWP (adjusted world average price) has risen steadily, rising from 44 cents at the beginning of the year to 55 cents higher than the US government's subsidy line of 52 cents.

The latest June 30, 2016 to July 6th was 56.11 cents / pound, the highest in the year.

When Zhou LDP (loan insufficient subsidy) is still negative, -4.11 cents / lb.

AWP is at a high level, which means that cotton farmers need to pay the CCC loan cotton to increase the cost of the CCC company (Commodity Credit Corp), which will reduce the cotton farmers' willingness to redeem cotton and reduce the market supply.

Therefore, the recovery of AWP will support ICE stage cotton.

India, July

Cotton prices continue to rise rapidly, up to 92 cents after a slight decline, S-6 ginning factory to pick up the latest price to 47250 rupees / hacked (about 89.5 cents / pound).

The main reason for the fall in cotton prices is mainly due to increased rainfall, planting area is expected to pick up, and the recent large-scale textile enterprises to increase procurement of foreign cotton.

For small textile enterprises, CCI has decided to open and store and sell at below market prices, but CCI's inventory is very limited.

As for 16/17, the estimated output of USDA is about 5 million 990 thousand tons, but we think there is a possibility of downgrading this output.

The India Cotton Association has recently predicted that India cotton planting area will be reduced by 7% in 2016/17, down to the lowest in seven years.

It is understood that the cotton fields in India area are affected by pests, and the seasonal rains and winds have prompted cotton farmers to grow crops such as sugarcane and peanuts.

The official plan was to finish planting in mid May to minimize losses caused by pests. However, in the middle and late 5 months, the sowing rate in India was only 60%-65%.

Although the cotton growers in India are replanting cotton seeds in recent years, the planting area is expected to pick up. However, judging from the current situation, it still can not make up for the impact of earlier pests. By the end of July, India's domestic acreage reached only 87% last year. According to this trend, India cotton will repeat the history and reduce the possibility of the next year's output.