Market Analysis: Shortage Of New Orders In The Textile And Clothing Market; Short-Term Cotton Prices Are Affected By Costs

　 （1） Increasing number of new flowers in the northern hemisphere

The US harvest of new cotton is close to 80%. The USDA report shows that as of November 19, the progress of American cotton harvest was 77%, a decrease of 1 percentage point over the same period last year, and an increase of 6 percentage points over the average value of the past five years.

The number of new Indian flowers on the market has increased steadily. According to the Indian Cotton Association, as of November 19, the cumulative market volume of Indian cotton in 2023/24 is about 993700 tons. The Indian Cotton Federation said that due to the very low demand for global textiles and clothing, India's domestic cotton prices will remain at a low level.

Pakistan's cotton market volume exceeds one million tons. According to the statistics of Pakistan Ginning Factory Association, as of October 15, Pakistan's new cotton has reached 1.019 million tons, nearly double the same period last year. The former vice chairman of Pakistan Cotton Farmers Association said that the recovery of cotton production was due to the introduction of the minimum purchase price by the government, which prompted cotton growers to expand their planting.

　 （2） Poor expectations of overseas holiday clothing consumption

US retail holiday sales are expected to weaken. According to the data of the US Department of Commerce, the retail sales of clothing stores in October were 26.11 billion US dollars, flat month on month; The retail sales of furniture and home furnishing stores reached US $10.62 billion, down 2% month on month and 11.8% year on year, with a larger decline. The American Retail Federation said that due to macroeconomic factors such as rising interest rates, the growth rate of holiday sales in the United States will slow down this year. In November and December, the holiday sales of online and physical stores in the United States are expected to grow by 3% to 4%, the slowest growth in five years. According to the U.S. Bureau of Labor Statistics, the number of retailers hiring on holiday fell to 135000, the lowest level in five years. This indicates that retailers are conservative in their expectations of holiday consumption.

The growth of retail sales of textiles, clothing and footwear in the UK narrowed. The abnormal warm weather in Britain has made consumers have a low desire for autumn clothes. According to data from the Office for National Statistics, retail sales of online and physical stores in October fell 0.3% month on month, falling for two consecutive months. PricewaterhouseCoopers reports that nearly one third of Britons plan to cut their Christmas spending this year.

Bangladesh's garment industry is in crisis. Since October, demonstrations by Bangladeshi workers demanding higher wages have led to the destruction of some factories. As of November 12, more than 130 garment factories in different industrial zones in Bangladesh had been closed. The Bangladesh Garment Manufacturers and Exporters Association said that foreign buyers were worried about the unrest in Bangladesh's garment industry and had been afraid to place new orders.

　 （3） Global cotton output and ending inventory in 2023/24 increased month on month

According to the data released by the International Cotton Advisory Committee (ICAC) in November 2023, the global cotton inventory at the beginning of the 2023/24 period was 21.24 million tons, unchanged from the previous month, with an increase of 1.83 million tons year on year; The output was 25.41 million tons, an increase of 430000 tons month on month and 790000 tons year on year; The consumption was 23.35 million tons, an increase of 40000 tons month on month and a decrease of 100000 tons year on year; The ending inventory was 23.32 million tons, an increase of 400000 tons month on month and 2.08 million tons year on year; The inventory consumption ratio at the end of the period was 99.87%, up 1.54 percentage points month on month and 9.29 percentage points year on year.

　　 The listing of domestic new cotton is accelerating, and the decline of textile consumption is gradually emerging

（1） Domestic picking is nearing the end, and about 40% of new cotton is on the market

The sales of reserve cotton ended smoothly. From July 31 to November 14, 2023, the central reserve cotton sales will have a cumulative listing volume of 1.232 million tons and a turnover of 0.885 million tons, effectively alleviating the pressure of tight cotton supply in the transition period between the new and old years, stabilizing market expectations, and ensuring the smooth development of new cotton sales and orderly market operation.

The listing of new cotton has been greatly accelerated. Affected by the early sowing delay and low temperature weather, the national new cotton picking progress in 2023 will be slower than that in previous years. Since the middle of October, with the decline of the domestic cotton spot price, the cotton farmers' sales progress has significantly accelerated compared with the early period. Up to now, the peak of ginning plant acquisition has passed, and the cotton processing progress has significantly accelerated compared with the previous year. The selling price of mainstream seed cotton in Xinjiang is 7.3-7.6 yuan/kg. According to the data of the national cotton market monitoring system, as of November 16, the picking progress of new cotton nationwide was 95.1%, down 0.2 percentage points year on year; The processing rate was 52.9%, a year-on-year increase of 13.4 percentage points; The accumulated processing lint was 2.567 million tons, an increase of 652000 tons year on year.

Cotton imports increased significantly year on year. According to customs statistics, China imported 290000 tons of cotton in October, up 21.9% month on month and 121.8% year on year. In 2023/24 (September October), China imported 530000 tons of cotton, up 140.9% year on year.

The cotton yield in Xinjiang is slightly lower than the average in recent five years. According to the recent research of the national cotton market monitoring system, the rainfall in September in northern Xinjiang has adverse effects on cotton boll splitting, boll opening and defoliant spraying. The single boll weight of cotton peach is light. The cotton yield in the disaster affected areas in southern Xinjiang also declined to varying degrees in May. The cotton yield decline in Xinjiang may be higher than the previous forecast. According to the latest forecast, the national cotton output in 2023/24 will be 5.66 million tons, a year-on-year decrease of 15.8%. The cotton output in Xinjiang is expected to be 5.24 million tons, a year-on-year decrease of 15.9%, slightly lower than the average level in recent five years (5.31 million tons).

　　 （2） The slack season of domestic cotton consumption is coming, and the sales atmosphere is getting colder

Domestic demand for textiles and clothing slowed down in October. According to the data of the National Bureau of Statistics, the retail sales of clothing, shoes, hats, needles and textiles in China in October 2023 were 120.7 billion yuan, up 7.5% year on year, narrowing from 9.9% in September, 10.2% year on year from January to October, and 0.4 percentage points lower than that from January to September. The "Golden Nine and Silver Ten" textile and clothing peak season has passed, and it is expected that domestic sales will not perform well before the end of the year.

In October, China's textile and clothing exports continued to decline. According to customs data, China's textile and clothing exports in October reached US $22.97 billion, down 8.4% year on year and 12.3% month on month, due to sluggish demand in major international consumer markets and geopolitical conflicts; From January to October, China's textile and clothing exports reached 245.71 billion US dollars, down 9.2% year on year. According to the recent survey of the national cotton market monitoring system, the future export situation is still not optimistic due to the global economic downturn and the transfer of textile orders to Southeast Asia.

The atmosphere of the textile market is getting colder, and the characteristics of the off-season appear. This year's textile and clothing "golden nine and silver ten" consumption shows the characteristics of low peak season. The e-commerce platforms' "Double 11" campaign performance is lower than that of previous years. The clothing sales of the whole network is 137 billion yuan, down 1.4% year on year. Next, in the slack season of the textile and clothing market, the cotton mill saw few new orders, and the raw material procurement remained on the sidelines. At the same time, the pressure on funds at the end of the year increased, making it difficult to maintain the start-up rate of enterprises. Small enterprises in some regions have entered the vacation mode. According to the survey of the national cotton market monitoring system, at the beginning of November, the start-up rate of the sampled enterprises was 83.4%, down 9.3 percentage points month on month. The traders' yarn inventory was still high, and they were generally lack of confidence in the future market, and selling goods at low prices increased.

　 （3） Decrease of domestic cotton output and consumption in 2023/24

Based on relevant special surveys and analysis of domestic and international economic environment and market conditions, the national cotton market monitoring system adjusted the forecast of China's cotton production, sales and stock in 2023/24 as follows:

In 2023/24, China's cotton inventory at the beginning of the period was 5.71 million tons, up 8.1% year on year; The output was adjusted to 5.66 million tons, down 15.8% year on year; The import volume was 1.7 million tons, up 19.7% year on year; Consumption was 7.6 million tons, down 1.3% year on year; The relationship between supply and demand has expanded from 980000 tons in the previous year to 1.94 million tons this year; The export volume was 20000 tons, up 11.1% year on year; The ending inventory was adjusted to 5.45 million tons, a year-on-year decrease of 4.6%; Inventory consumption ratio was 71.71%, 2.3 percentage points lower than that of the previous year.

Main conclusions

The acquisition of Xinjiang cotton picking is nearing the end. The mainstream acquisition and processing cost is 16500-17300 yuan/ton, which is basically consistent with the spot price level of domestic cotton, and 1200-2000 yuan/ton higher than the price of Zheng cotton. Short term cotton prices are still affected by new cotton processing costs. In the medium and long term, demand changes will play a more prominent role in leading prices. The global economic growth is expected to slow down, and the economic data of many countries all reflect the trend of economic weakness. The endogenous power of domestic economic growth is not strong, and the recovery of consumer demand is slow. At present, the progress of cotton listing at home and abroad is accelerating, the supply is increasingly loose, and the textile and clothing market is short of new orders. With the arrival of the textile and clothing consumption off-season, the domestic cotton price will face greater downward pressure.

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