When Will The Quota Policy Be Announced In 2018? Cotton Prices Are Bound To Change.

In the past month, ICE cotton futures and the Klock A index fluctuated sharply. In mid May, the price quickly dropped after the rapid rush, and now it is back to the low point of trading at the beginning of the year.

China's spot price rose slightly. India's S-6 was basically stable at around 85 cents, while Pakistan's price was stable at around 79 cents.

The US Department of agriculture forecast June to increase global production and consumption in 2017/18, the output increased by 1 million 500 thousand packs to 114 million 700 thousand packages, and consumption increased by 760 thousand to 116 million 500 thousand packs.

The increase was mainly from Pakistan (800 thousand bales), China (500 thousand packages) and Mexico (150 thousand bales).

The increase was mainly from China (500 thousand packages), India (200 thousand packages) and Pakistan (200 thousand packages).

The global import volume was reduced by 785 thousand packages, mainly from Pakistan (600 thousand packages) and Mexico (125 thousand packages).

The volume of exports decreased mainly in the United States (500 thousand packs), India (300 thousand packages) and Brazil (100 thousand packages).

Despite the reduction of global initial inventory in 2017/18, ending inventories still increased by 564 thousand packages, reaching 87 million 700 thousand packages, representing a decrease of 1 million 600 thousand packages compared with the same period last year, of which China's inventory dropped by 9 million 100 thousand to 39 million 300 thousand packs, 40% lower than the 66 million 900 thousand highs of 2014/15.

Nevertheless, China's cotton stocks are still nearly two times that of ten years ago.

2017/18, outside China

Inventories are expected to grow by 20%, reaching 48 million 400 thousand packs and a record high.

According to the prediction of the US Department of agriculture in June, the global gap between production and demand in 2017/18 is reduced to 1 million 800 thousand packs. If the main cotton producing country is ideal, the gap will easily be made up. Whether the global production will exceed the demand or a slight gap will not significantly change the inventory situation in China and beyond.

In recent years, China's cotton reserves have gone smoothly, and 2017/18 should continue to digest rapidly. Inventory consumption is down from 130% in 2016/17 to 105%.

Nevertheless, China's

There is still plenty.

In the next one or two years, the Chinese government is likely to continue to strictly control the quota for cotton imports until the ratio of inventory to consumption falls to the level of close to the historical average.

In the first ten years of this century, China's inventory consumption was closer to 50% than most of the time.

However, in the future, China's supply and demand gap will be stable at about 2000000 tons, so the issuance of quotas is sooner or later.

Once the restrictions are relaxed, China's cotton imports are likely to reach more than 2 million tons as they used to.

In the current year, excess supply outside China can be used as a buffer for China's issuance of quotas.

Whether this buffer can be maintained is a long-term observation of cotton prices.

Polyester cotton yarn volume is not large, prices remain stable.

Polyester and viscose yarn 40S/2 pactions increased slightly, the price is basically stable.

At present, there is a slight increase in the stock of the cotton mill, and the construction starts to maintain a high level. The new orders are not well followed up in the late stage, and the overall production and sales rate shows a downward trend.

No matter when the quota policy will be announced in 2018, it will have an important impact on cotton prices.

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