Global Perspective: Focus On The Development Trend Of Global Cotton Market

　　 Global cotton supply and demand is becoming more relaxed

（1） Overseas terminal clothing consumption has not improved yet, and the retail inventory of American clothing is beginning to show signs of stopping rising

The inflation of American clothing fell back, and the inventory tended to stabilize. According to the data of the US Department of Commerce, the US clothing CPI in October 2022 increased by 5.2% year on year, narrowing from the revised 6.8% growth last month. In October, the inventory/sales ratio of American clothing stores was 2.15, which was the same as that of the previous month. It did not rise again for two consecutive months, but the inventory of wholesalers was still increasing. Judging from the continued decline in clothing retail sales in November, the United States can only reduce its inventory by reducing imports.

Euro zone retail sales in October were weaker than expected. According to Eurostat, in October, retail sales in the 19 countries of the euro area fell 1.8% month on month, 2.7% year on year, which was more than expected, indicating weak consumer demand. In October, the UK CPI rose 11.1% year on year, a new record in the past 40 years. The sales of British textiles, clothing and footwear products in that month decreased 18.1% month on month and increased 6.3% year on year.

　　 （2） The supply of new flowers in the northern hemisphere is steadily increasing, and the progress of listing varies from country to country

The American cotton harvest is basically over. The USDA report shows that the US new cotton harvest is nearing the end. In November, the USDA raised the US cotton output by 46000 tons to 3.101 million tons, a year-on-year decrease of 714000 tons, or 18.7%.

India's new flower market reached 900000 tons. As of December 4, India's cumulative cotton market volume in 2022 was about 908400 tons, about 645500 tons less than the average of the same period in the past three years. Cotton farmers hold cotton and are reluctant to sell it. In addition, ginning mills are cautious in purchasing, which leads to the slow listing of Indian new cotton. The Indian Cotton Association predicted that India's cotton output in 2022 would be 5.85 million tons, up 12% year on year.

Pakistan's cotton market volume is about 730000 tons. According to the statistics of Pakistan Ginning Factory Association, as of December 1, the market volume of new cotton reached 730000 tons, accounting for 74.5% of the expected output of 980000 tons. Pakistan's cotton imports are expected to increase due to the sharp decline in domestic cotton production.

　　 （3） In 2022, the global cotton output will increase slightly, and the consumption will decrease significantly by more than one million tons

In December 2022, the International Cotton Advisory Committee released the forecast data of global cotton production, sales and stock, which shows that the global cotton output in 2022 will be 25.09 million tons, an increase of 0.2% month on month and 0.5% year on year; The consumption was 23.84 million tons, down 4.3% month on month and 7.2% year on year; The inventory consumption ratio at the end of the period increased from 79.93% of the previous period to 88.26%, an increase of 8.3 percentage points, an increase of 11.26 percentage points year on year. In terms of countries, India, Brazil and China increased production, while the United States and Pakistan expected to reduce production. Except India, the consumption of other major cotton consuming countries declined to varying degrees, leading to a sharp increase of more than 10 percentage points in the inventory consumption ratio at the end of the period.

　　 The decline of terminal clothing consumption is obvious, and the textile market is showing signs of improvement

（1） Inadequate internal and external market demand becomes "outstanding challenge"

In November, under the influence of the epidemic, the living radius and consumption were suppressed. According to the data of the National Bureau of Statistics, in November 2022, the retail sales of clothing, shoes, hats, needles and textiles amounted to 127.6 billion yuan, down 15.6% year on year, further expanding the decline from October to 7.5%. From January to November, the cumulative year-on-year decline was 5.8%, and the cumulative decline from the previous month was - 4.4%. With the adjustment of domestic epidemic prevention policies and the release and implementation of the Outline of the Strategic Plan for Expanding Domestic Demand (2022-2035), domestic consumption is expected to improve.

China's clothing exports continued to grow negatively in November. According to customs data, China's clothing export continued to decline in November after turning to negative growth in September and October 2022. The clothing export volume in November was 13.12 billion US dollars, down 14.9% year on year, the third month of negative growth since December 2020, but the decline was slightly narrower than that in October - 17%. In the general environment of shrinking demand, the government and enterprises in some regions have made joint efforts to open up the market for more orders.

The textile market ushered in signs of a long lost recovery. With the shift of epidemic prevention policy adjustment, the short-term textile market has seen a gradual and small recovery. Enterprises have taken the opportunity to speed up the de stocking of cotton yarn, and some large textile enterprises have increased their raw material inventory moderately. At present, the market is still cautious about terminal consumption, and the sustainability of order improvement remains to be seen.

　 （2） Gradual increase of domestic fresh cotton supply

The domestic cotton output reached a new high. According to the latest survey results of the national cotton market monitoring system, the national cotton output is expected to be 6.138 million tons in 2022, an increase of 5.8% year on year, a new high since 2015. The cotton output in Xinjiang is expected to be 5.634 million tons, an increase of 7.1% year on year, which is expected to hit a record high again.

The supply of new cotton was accelerated, and the processing capacity was close to 3.7 million tons. With the continuous progress of cotton processing and public inspection in Xinjiang, the number of new cotton on the market has gradually increased. According to the estimated domestic cotton output of 6.138 million tons, as of December 15, the country had processed 3.673 million tons of lint, a year-on-year decrease of 902000 tons, of which 3.466 million tons were processed in Xinjiang; The national cumulative notarial inspection was 1.9972 million tons, down 48.4% year on year, including 1.9638 million tons in Xinjiang.

　 （3） Significant increase in domestic cotton production in 2022/23, and consumption is expected to recover slightly

Based on relevant special surveys and analysis of domestic and international economic environment and market conditions, the national cotton market monitoring system maintained the last month's view on the forecast of China's cotton production, sales and stock in 2022/23 as follows:

In 2022, China's cotton output will be 6.138 million tons, an increase of 337000 tons or 5.8% year on year; The cotton consumption was 7.55 million tons, an increase of 250000 tons or 3.42% year on year, and the cotton import was 1.9 million tons, an increase of 170000 tons or 9.9% year on year; The inventory consumption ratio at the end of the period was 75.91%, up 3.76 percentage points from the previous year.

　　 Main conclusions

To sum up, in the context of the global epidemic and economic stagflation, the lack of cotton consumption has become an indisputable fact. After the optimization and adjustment of China's epidemic prevention policy, it has brought a ray of light to the consumer market. Recently, the cotton market has shown an obvious pattern of internal strength and external weakness. After Zheng Mian Futures broke through 14000 yuan/ton, it set aside hedging opportunities for cotton processing enterprises, and the textile market also ushered in a long-awaited turnaround. After the easing of epidemic prevention and control, people are in the transition and adaptation period, and the terminal demand has not been reflected soon. The height of the rise in the price of cotton raw materials in this round is still limited, and the performance of terminal demand around the Spring Festival still needs to be observed in the short term.

Looking forward to 2023, with the active promotion of China's strategy of expanding domestic demand, it will also help the market regain confidence and reconstruct good expectations.