The Fundamentals Are Bad, And Textile Consumption Is Hard To Recover.

In the past month, international cotton prices have risen slightly, and ICE futures have risen from 58 cents to nearly 60 cents, and the A index has risen from 65 cents to 68 cents.

In recent months, global consumption forecasts have been revised down and ending inventories have been raised, but cotton prices are opposite to their fundamentals. One reason is that the market is not so pessimistic about the recovery of the post epidemic market. Another reason is that central banks injected liquidity to make the money supply adequate, making cotton prices similar to that of the stock market. In early April -6, the correlation between ICE cotton futures and standard & Poor's 500 index reached 89%, while the previous year's correlation was only 38%.

Nevertheless, fundamentals will have an impact on the long-term trend of cotton prices. In the near future, the world bank has lowered the global economic growth expectation, and the global GDP is expected to shrink by 5.2% in 2020. In April, the IMF predicted that global GDP would shrink by 3%.

Affected by the macroeconomic situation, clothing products have been shelved by consumers. In April, retail sales of apparel in the United States dropped by 48% compared with the same period last year, and retailers' stocks surged and forced to cut sales. In April, American Apparel CPI was the lowest since 1987. Although online consumption also has bright spots, sales decline and profit decline have made it difficult for many retailers to purchase orders.

In April, the weight of American clothing imports was reduced by 45% over the same period last year. Although April is usually the least time for us clothing imports, this decline has been equivalent to 420 thousand bales of cotton consumption. How long will it take for the consumption of the global epidemic to decline before we know it? Although breakthroughs in medical research may change the current situation, the epidemic is likely to recur at any time, and the global cotton textile supply system has been hit hard.