Who Will Fill The Gap In China'S Cotton Market?

Jo Nicosia, President of Louis Da Fu, said at a recent US industry conference that the cotton industry is recovering and cotton prices will exceed 80 cents in the next two years.

By 2020, the output of US cotton will reach 20 million packages (4 million 350 thousand tons).

To meet the growing demand for exports, the global cotton planting area needs to increase by 700-800 acres (4252-4860 acres).

Nicolas said that a series of new factors have emerged and will continue to grow in the future to further push up cotton prices.

Last year, cotton prices were barely paid at 58 cents, but now they have risen 17 cents. Although the negative factors still exist, the market is rapidly entering the bull market.

Nicholas was not so optimistic at a meeting a year ago, but said cotton prices had reached a turning point as the stock of cotton reserves declined.

He said that in 2016, China's reserve cotton stocks were sold in large quantities, while stocks are still very high, but they are moving in the right direction, dropping from 112 million packages to 90 million packages.

Meanwhile,

Exports have also made the American market particularly exciting.

Nicholas said that the increasing demand for us cotton exports is a very good news for the market. The demand of other countries such as Vietnam and Bangladesh has kept up. The US cotton export will surely exceed the 12 million 700 thousand package estimated by the US Department of agriculture, and the inventory will further decline.

India's monetary policy has made it difficult for India cotton to export smoothly, and the export of cotton in Pakistan and Uzbekistan has decreased.

At present, the United States cotton has accounted for 36% of global cotton exports, and will further improve.

Nicholas said that China's cotton stocks are dropping to a level that needs to start importing large quantities, and even if cotton planting area increases, it will not be able to meet the shortage of supply. Then China will become a big importer of cotton.

By 2018 or 2019, China will digest most of its reserve cotton stocks and there will be gaps in domestic supply.

In 2017 or 2018, inventory levels in China and other regions will be even closer. China's inventory is about 39 million packs.

It's about 44 million bales.

So who will fill the gap in China? By 2020, the United States can produce 20 million bales of cotton, but to fill the gap of 10 million packages in China, the cotton area needs to increase by 700-800 acres, so the United States and other countries need to expand.

At that time, farmers from all over the world will flock to the ideal variety.

Nicolas said that no one will expand the cotton price of 60 cents, 80 cents, most countries will expand, and 100 cents will grow cotton, but the cotton output should meet the demand when the cotton price is 80 cents.

The United States will be prepared to meet the growth of demand.

At present, the yield of cotton in the southeastern, central and southwestern regions of the United States is higher than that of corn and soybean.

If cottonseed can be used as an oil crop to become the preferred strategic commodity of the Trump administration, the cotton price will go up to a higher level.

Nicolas reminded the market that cotton prices will still fluctuate in the future. The weather in western Texas has an important impact on the market.

This year, the rate of abandonment in western Texas is 20%, which has never been seen. The rate of abandonment in western Texas is either 6% or 36%, which means that cotton prices may be extreme.

Excluding weather factors, he thinks cotton prices will continue to rise in the late term, and under certain conditions, cotton prices must rise to 80 cents.

Cotton area needs to increase significantly in 2018-2019 years, but not now.

For more information, please pay attention to the world clothing shoes and hats net report.