Global Cotton Output Or Record High In 2019/2020

When the Sino US trade negotiations have not ended, the US Department of agriculture's suspension of data update has brought many uncertainties to the market.

In many ways, the market is in a pitional period this year, but now the year has reached the middle stage, but there are still more problems than answers.

It is widely believed that with the decline of China's reserve cotton stocks, China expects to increase imports in 2018/19, but so far, China's imports have not increased substantially.

One of the reasons for the increase in China's cotton imports is the Sino US trade war.

Despite the progress made in the January 7th trade negotiations, no specific points were announced, nor is there any indication that China will buy more American cotton.

Another factor is that the market is not optimistic about the global economic outlook.

Since last summer, global GDP growth has been declining, mainly due to slowing economic growth in China and Europe.

Although the US employment figures are strong, there are some indicators that the US's growth may have reached its peak.

The slowdown in global economic growth is closely related to the slowdown in cotton demand growth, as is the case with commodities.

International oil prices dropped sharply after October, as the market expected China's economic growth to slow down.

It is widely believed that the US Department of agriculture's forecast of cotton consumption in December is not consistent with the recent macroeconomic deterioration.

Now the release of the initial forecast from 2019/20 is getting closer and closer, and the possible economic recession in the next 1-2 years will bring uncertainty to the market.

Although the downturn in growth means slowing growth in plant consumption, it should be remembered that most recession will not be as severe as 2008/09.

From a preliminary forecast, most market participants believe that global production will increase significantly in 2019/20.

This year, several of the world's largest cotton producers have been exposed to bad weather.

In the spring and summer drought in Texas, the southeast cotton region suffered many hurricanes. Almost all cotton producing areas suffered rainfall during the harvest season. Australia also experienced an unusual drought. Irrigation water supply in India, Pakistan and Central Asia was also below normal levels.

These factors have a negative impact on cotton production this year.

Weather conditions will improve in 2019/20, and global cotton production is higher than this year.

The US cotton production situation has improved, and the drought has eased completely in recent months. The US Department of agriculture and the private sector expect us cotton production to increase by about 220-240 bales. The total output of other countries (such as India and Australia) will increase by 100-200 packages. The planting area of Brazil will increase substantially, and the global output will increase by 10 million packs compared to the same period last year.

If forecast is achieved, global cotton output will reach a record high in the next year (reaching 129 million 200 thousand packs).

If output increases substantially, the possibility that prices will go down will be very large.

Demand is likely to decline, and output may be higher, indicating that cotton stocks will increase substantially.