Market Analysis: The USDA Released Its Report On Cotton Supply And Demand In March

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The US Department of Agriculture released the global cotton supply and demand report for March. Forecast of global cotton supply and demand: the forecast value of global cotton output in 2023/24 is increased by 28000 tons to 24593000 tons compared with the previous month. The global consumption increased by 105000 tons to 2459100 tons, the import volume was 9.412 million tons, the export volume was 9.419 million tons, the global ending inventory was 18.146 million tons, and the month on month decrease was 77000 tons.

In terms of specific output, as the decline in the output of the United States and Argentina was offset by the increase in India's output of 109000 tons, the global output increased by nearly 30000 tons month on month.

In terms of consumption, global consumption increased by nearly 105000 tons, and the growth of China and India offset the lower expectations of Turkey and some smaller countries.

In terms of import and export, as China's import volume will increase by 196000 tons in 2023/24, the global cotton trade volume will increase by about 80000 tons, far offsetting the reduced cotton import volume of Turkey and several smaller countries. Among the export volume, India, Australia and Turkey are expected to increase. The inventory at the end of the period decreased slightly, from 79000 tons to 18.145 million tons.

The USDA report increased the global cotton output for two consecutive months, with a total increase of 49000 tons. However, the U.S. cotton output has a large downward space. In 22/23, the U.S. cotton output was 3.15 million tons. In March, the U.S. cotton output was estimated to be 2.634 million tons. In February and March, the U.S. cotton output decreased continuously, with a total decrease of 152000 tons in two months, a year-on-year decrease of more than 16%. Because of the impact of El Nino in that year, The agency's estimate of US cotton production in the new year continued to decline. However, as India's production areas are conducive to crop growth, the increase in yield offset some of the decline in American cotton.

In February 2024 and March 2024, the USDA report raised the global cotton consumption forecast. In February, it increased by 6000 tons, and in March, it increased by 105000 tons. There is obvious room for the global cotton consumption forecast to increase, which shows that the market's confidence in the recovery of cotton consumption in the later period is still improving.

In the USDA report in March, the global cotton production, consumption and ending inventory were increased. The increase in consumption was greater than the increase in output, and the continuous increase in consumption increased. The overall data is relatively favorable to the US cotton market. However, the poor export sales data of American cotton released last week offset the positive effects of some supply and demand forecast data.

The main price of ICE US cotton fell again last Friday, dragging down the domestic cotton market. The short-term profit news had limited impact on the panel. In addition, the 2405 contract price of Zheng Mian, the main force, fell below the six thousand mark again, the short-term supply side was relatively abundant, and the traditional consumption peak season was gradually emerging less than expected, so the price center may continue to move downward in the future.