There Is A Story About Supply And Demand Of Cotton.

"Interest rate cuts" arrived on schedule, plus the bottom of the policy of purchasing and storage, which had limited space to fall, and the epidemic continued to temporarily inhibit the upward trend of cotton market. Global cotton production uncertainties increase, planting willingness to reduce, locust disaster, may lead to a decline in cotton future production, coupled with the slow recovery of downstream demand, when the outbreak of inflection point or improve, it is expected to usher in a rising market. Cotton rose 0.41% today, closing at 13325.

"Interest rate cuts" as scheduled, global supply will fall.

According to the NCC survey, in 2020, the intentional planting area of Upland Cotton in the United States was 12 million 800 thousand acres, a decrease of 5.6% compared with the same period last year, and the planting area of Pima cotton was 224 thousand acres, a decrease of 2.7% over the same period last year. The intention area of NCC is from mid December 2019 to mid January -2020.

NCC said that from a historical perspective, cotton growers in the United States decide planting area based on cotton prices. Compared to the same year, cotton prices fell and corn and soybean prices rose this year. Corn, soybeans and wheat are more competitive this year than cotton. Therefore, cotton / corn and cotton / soybean prices are lower than the same period in 2019, which usually leads to a reduction in cotton area. Because the cost of cotton production is high, unless the unit yield is ideal, it may not be able to fill all the cost of production.

According to the latest USDA2 month global demand and demand forecast report, in the year of 2019/2020, the world's cotton ending stocks increased by 2 million 500 thousand packs, and China's cotton consumption was reduced by 1 million packages. Vietnam's consumption volume was reduced, and the consumption of Pakistan and Turkey increased.

Domestically, in February 2020, the China Cotton Association conducted second cotton planting willingness surveys for the mainland and Xinjiang designated farmers. The survey results showed that the cotton planting willingness area in China was 45 million 574 thousand and 800 mu, down 5.36% compared with the same period last year.

By the 01 month of 2020, the USDA report showed that the world's cotton production was estimated at 120 million 480 thousand packs, with a reduction of 630 thousand packs.

The people's Bank of China has authorized the national interbank lending center to announce that the loan market quotation rate (LPR) in February 20, 2020 is: the 1 year LPR is 4.05%, down 10 basis points, and the LPR over the 5 year period is 4.75%, down 5 basis points. A loose monetary environment will create favorable conditions for the recovery of cotton demand.

Locusts disaster sweeps India Pakistan cotton producing area

The locust army has arrived in Pakistan to the border of India and Pakistan, invading India and Rajasthan, and India's cotton production is about 6 million 420 thousand tons, accounting for about 24.3% of the world's total output. Pakistan's cotton output is about 1 million 440 thousand tons, accounting for 5.5% of the world's total output. As a result, cotton production in India and Pakistan accounts for about 30% of the world's output.

At present, most parts of cotton in India and Pakistan have been harvested. Desert locusts may have little effect on cotton yield this year, but may have an impact on the next year's output. Cotton cultivation in India usually starts in early June and basically completed in early August. According to the FAO (food and Agriculture Organization of the United Nations), locusts are expected to grow in April and become adults in July, which will have an impact on cotton planting and production in the region.

The supply locust disaster will pose a great threat to India Pakistan cotton production, and demand side, the current new crown virus will impact domestic cotton demand in a short time, and these two contradictions can not be falsified, all need time to verify.

In summary: the supply side, the United States cotton production determined, mainly concerned about the new year's planting area and output, India and Pakistan cotton planting in the new year will be affected by locust. Cotton processing in Xinjiang is drawing to a close, with a reduction of nearly 3.5%.

Demand side, Sino US economic and trade first stage economic and trade agreement signed, textile and clothing exports and domestic demand still need further observation.

Therefore, the cotton supply will be tight in the future, and the downstream demand will slowly recover. When the epidemic has changed positively, cotton will have a strong trend. At the same time, attention should be paid to the follow-up effect of locusts on cotton cultivation in India and Pakistan.