Market Observation: The US Cotton Output Maintains Its Expectation, And The Demand Is Expected To Shrink

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The United States is the largest cotton exporter in the world. Since the trade friction between China and the United States, it has affected the procurement sources of China's cotton and related industries, but it is conducive to the export and consumption of American cotton.

　　USDA According to the October supply and demand report, the U.S. cotton output in 2022/2023 will decrease by 1.024 million tons to 2.791 million tons, the annual consumption will decrease by 87100 tons to 468000 tons, the ending inventory will decrease by 206000 tons to 610000 tons, and the inventory consumption ratio will decrease by about 130.34%. Compared with the data in September, in October, the US output was lowered by 68000 tons, the export was lowered by 22000 tons, and the corresponding end of the period decreased by 43000 tons.

Since the middle of this year, the growth situation of American cotton has been not optimistic. The main production areas have continued to experience high temperature and dry weather, and the soil moisture in Texas has continued to be poor. Cotton yield and quality have been affected to a certain extent. After the middle of September, the temperature in the production areas has dropped, and the rainy weather has ushered in western Texas. The production situation has recovered to a certain extent, but some areas have begun to harvest, The previous high temperature has had an actual impact on the output. As of October 17, the dry area in Texas accounted for 74.43%, with a decrease of 0.52 percentage points on a weekly basis. However, the proportion of cotton affected by drought increased by 5 percentage points month on month to 47%. The boll opening rate of American cotton was 87%, up 5 percentage points on a weekly basis, and the harvest progress of American cotton was 33%, up 8 percentage points on a weekly basis.

Both the month on month ratio and expectation of American clothing retail sales are not optimistic. In September, the retail sales of American clothing and clothing accessories in the same month were $26.017 billion, down 0.8% month on month and up 0.1% year on year. As of October 12, the net export sales of American upland cotton in the week were 16000 tons, up 6000 tons month on month. The shipment volume of American upland cotton exports was 24900 tons that week, up 13400 tons month on month. From January to September, textile and clothing exports totaled US $223.148 billion, down 10.15% year on year. In September, exports were worth US $26.196 billion, down 6.61% year on year. In August, the inventory of American clothing and clothing accessories wholesalers was $35.457 billion, down 2.59% month on month and 15.56% year on year.

Powell made a dove like speech, suggesting that the Federal Open Market Committee may suspend interest rate hikes again at the interest rate meeting in November, and the probability of another interest rate hike within the year is expected to reduce to 19.78%. Although the U.S. economy has shown its strong resilience, the market is still dominated by pessimism. Clothing costs are rising, consumer purchasing power has significantly declined, and the growth rate of clothing demand has been close to zero. In the fourth quarter, the demand side of American cotton still has the risk of continuing to decline. In October, we need to focus on the extreme drought in Texas and the USDA abandonment rate data. November is a key window to see whether its monetary policy changes.