Market Observation: The Price Of Cotton And Cotton Yarn In The Textile And Clothing Market Is Not Prosperous In Peak Season

The picking and processing of major cotton producing countries in the world is progressing steadily, and changes in the external market may increase the fluctuation range of cotton prices.

According to the October global supply and demand forecast of the US Department of Agriculture, the global cotton output will increase by more than 200000 bales in 2024/25, and the increase in the output of China, Brazil and Argentina will offset the decrease in the output of the United States and Spain. In 2024/25, the cotton output of the United States will be reduced by more than 300000 bales to 14.2 million bales, and the average unit yield of cotton in the United States will decrease by 18 pounds to 789 pounds/acre. The Indian Cotton Association said that due to the reduction of planting area and excessive rainfall, India's cotton output in 2024/25 is expected to decline by 7.4% year on year, which will lead India to reduce cotton exports and increase cotton imports.

In terms of peripheral markets, the US general election has entered a critical stage, and the disturbance at the macro level is large. With the approaching of the November interest meeting, the volatility of the financial market has significantly increased recently. The decline of the stock market and bulk commodities and the rise of the US dollar have brought pressure on the cotton market. Although the cotton fundamentals are slightly more favorable in the near future, it cannot be ruled out that the cotton price may increase its volatility due to changes in the peripheral markets.

The textile and clothing market is not strong in peak season, and the downstream demand is weak

The price of cotton yarn is relatively stable, but as the textile and clothing market is about to enter the off-season, the downstream supply of goods is slow, and the inventory of finished products of some enterprises has increased. Textile enterprises have insufficient confidence in the future market, raw material procurement is cautious, and the willingness to replenish the inventory is not strong. The inventory rate of cotton yarn of some textile enterprises has increased. Most textile enterprises continue to follow the on-demand procurement strategy, and control the overall stable decline in the start-up rate of downstream weaving enterprises in coastal areas. The start-up rate of large-scale weaving enterprises is OK, but the start-up rate of small enterprises has significantly decreased.

The textile and clothing market is not flourishing in the peak season. With the traditional peak production and marketing season coming to an end, textile orders are expected to decrease in the later period. According to the data of the General Administration of Customs, China's textile and clothing exports reached a new monthly high in August, and then fell to a medium low level in September. The export volume was 24.78 billion US dollars, down 3.8% year on year and 11.4% month on month. According to the data of the National Bureau of Statistics, the retail sales of clothing, shoes and hats, needles and textiles in China in September reached 116.88 billion yuan, a year-on-year decrease of 0.4% and a negative growth for four consecutive months.

Future forecast: With a large number of new cotton coming on the market, the supply side will continue to maintain a loose pattern. Without a significant rebound in downstream demand, the cotton price will have a greater upward pressure. However, the decline in cotton prices since October has basically realized the gradual increase in new cotton supply and the weakening of downstream market demand. The space for cotton price decline is limited, and it is expected that it will continue to be a volatile pattern in the short term, Pay attention to the situation of favorable policy feedback to the demand side and changes in the peripheral macro market.