Supply And Demand Analysis Of Cotton At Home And Abroad In 2011/2012

2011/2012, Global cotton Output increases and overall supply exceeds demand. In the face of the global economic situation, market confidence is insufficient, textile downstream demand is difficult to fundamentally improve, and there is still room for domestic cotton demand to continue to decline. Domestic cotton temporary purchasing and storage policy has raised the cost of domestic cotton spinning enterprises while stabilizing cotton prices. The future cotton price trend will depend on the downstream consumption situation.

　　 Global cotton supply exceeds demand

According to the January report of the international cotton advisory board (ICAC), compared with the previous month, the global cotton initial inventory of 2011/2012 increased by 242 thousand tons to 9 million 252 thousand tons in the first half of January, and the output was reduced by 1 thousand tons to 26 million 787 thousand tons. Among them, the United States and India respectively reduced 41 thousand tons and 85 thousand tons, Turkey increased 34 thousand tons, and the Brazil increased 59 thousand tons; consumption was reduced by 129 thousand tons to 23 million 737 thousand tons; the end of the stock was increased from 372 thousand tons to 23 million 737 thousand tons, an increase over the previous year. The US Department of agriculture (USDA) March global cotton production and demand forecast report also continued to increase supply and reduce consumption.

From several major cotton producing countries, although the southwestern part of the United States has been cut down by drought, the southeast and delta regions of the United States are expected to harvest 5 million 100 thousand and 4 million 700 thousand bags respectively this year. The output of the southeast region has reached its highest value in 6 years. Delta production has reached the highest yield since 2007. In the western region, the yield of upland cotton is expected to increase for second consecutive years after 5 years of production reduction. The output of upland cotton is estimated at 1 million 400 thousand packs, the largest since 2003.

India's output forecast is down. According to the latest forecast of India Cotton Advisory Committee (CAB), cotton production in India this year was 5 million 865 thousand tons, down 187 thousand tons compared with the forecast, because cotton yield per unit area decreased and new cotton listing continued to be lower than the same period last year. However, the volume of cotton exports this year has increased to 1 million 428 thousand tons, an increase of 68 thousand tons compared with the previous forecast, due to the increase in China's import demand. As of the end of January this year, India has shipped 748 thousand tons of cotton exports.

Pakistan's new cotton market is much higher than expected. Analysts predict that by the end of May 2012, cotton production in Pakistan is expected to exceed 16 million packs, which is higher than the 14 million 10 thousand package output target set by the CCAC.

Damage to Australian cotton fields is much lower than expected. According to the latest prediction by the Australian agricultural resources and Management Bureau (ABARES), Australia will export 955 thousand tons of cotton in the current fiscal year (July 2011 ~2012 June), up by 89% compared with the same period last year, and the total output of cotton will reach 1 million 100 thousand tons.

Brazil's cotton exports soars in January. Brazil's cotton exports increased by 173.8% in 2012 to 52 thousand and 700 tons in January, a substantial increase over the seventh month period.

Because of the difference between domestic and foreign cotton prices, China's imports of cotton surged in 2011/2012. According to customs statistics, China's cotton imports totaled 3 million 365 thousand tons in 2011, an increase of 18.5% over the same period last year. In 2011, as of December 31, 2011, the total import volume of 1 million 673 thousand and 600 tons increased by 89.2% over the same period last year.

In the whole year of 2011, general trade accounted for more than half of the main cotton imports, followed by feed processing, close to 20%, and processing at least 1%. From the point of view of importing countries, India surpassed the United States and became the largest source of import country in China, accounting for nearly 30% of the total, while the United States cotton ranked second in 1 percentage points; Australia and Brazil grew rapidly, third and fourth respectively; Uzbek ranked fifth.

　 Downstream demand continues to slump

Under the circumstances of the global economic situation, Textile downstream There is no fundamental improvement in demand. After the Spring Festival, the price of cotton yarn and cotton cloth rebounded in China. However, according to the investigation by the relevant agencies, 72% of the enterprises thought that the reason for the increase in yarn and cloth prices was driven by the increase in raw material prices, while 52% of the enterprises took a slight look at the first quarter orders.

Rising prices inhibit consumption. In 2011, driven by a series of factors, such as raw materials, labor and energy prices, the price of terminal textiles and clothing increased significantly, which had a certain inhibitory effect on consumption and exports. According to the National Bureau of statistics, clothing consumption in 2011 increased by 2.1% year-on-year, compared with 1% in 2010. In 2011, the total retail sales of clothing shoes and hats and needle textiles increased by 24.2% over the same period last year, 0.6 percentage points lower than that in 2010.

On the export side, under the competition of many exporting countries, the demand for textile price increases is more obvious. According to the US Department of Commerce, imports of textiles and clothing increased by 9.25% in the month of 2011 1~11, while imports fell by 2.14% over the same period last year. Among them, imports from China increased by 6.2% compared to the same period last year, and imports fell by 2.47% over the same period last year. According to China Customs data, in December 2011, the export volume of textiles and clothing dropped to below 10% in the same period last year, of which the export volume of cotton textile and clothing increased by less than 3% compared to the same period last year, down 13.2 percentage points from the same period last year, and the trend of decline was obvious.

The rising cost trend is hard to reverse. The trend of the rising cost of textile industry in China is still continuing, especially the trend of rising labor cost is difficult to reverse. The continuous improvement of wage level has gradually changed the previous situation of low labor cost. According to the National Bureau of statistics, the per capita wage income of rural residents increased by 21.9% over the same period of 2011 as the wages of migrant workers increased. Wage income accounted for 42.5% of the net income of rural residents, an increase of 1.4 percentage points over the same period last year. The per capita wage income of urban residents increased by 12.4%.

Under the support of State purchasing and storage policy, China's cotton market has a reliable guarantee for stable operation, but at the same time, the domestic cotton price is higher than the foreign cotton price, so that the downstream cotton industry in China undertakes a much higher raw material cost than foreign counterparts, and raises a series of product prices such as yarn, cloth, clothing and other industrial chains. Many enterprises have begun to find another way out. Some enterprises are actively seeking to invest in factories abroad, such as Vietnam, so as to reduce labor costs and raw material costs, while others increase the import of raw materials and intermediate products to hedge domestic costs.

As demand situation is not optimistic, in February, the national cotton market monitoring system made the following adjustments to production and storage data: reducing domestic cotton consumption in 2011 to 180 thousand tons to 8 million 696 thousand tons, and import volume increased 24 thousand tons to 4 million 219 thousand tons. After adjustment, the domestic cotton end stocks increased 207 thousand tons to 5 million 280 thousand tons in the current year, and the final inventory consumption ratio was 60.6%, up 3.6 percentage points from the previous month. In the 2012 year, the stocks in the early period increased by 207 thousand tons to 5 million 280 thousand tons, and the import volume was reduced by 81 thousand tons to 2 million 917 thousand tons, and the consumption volume was reduced 110 thousand tons to 8 million 924 thousand tons. After adjustment, the stock will be increased from 236 thousand tons to 5 million 895 thousand tons at the end of next year, and the final inventory consumption ratio will be 65.96%, up 3.4 percentage points from last month.

　 Purchasing and storage policy to ease supply pressure

Since the implementation of the purchase and storage policy, Cotton enterprises As a positive response, as of March 9th, the total volume of storage and purchase transactions has reached 2 million 800 thousand tons this year, including 1 million 211 thousand tons in the mainland and 1 million 589 thousand tons in Xinjiang. Domestic reserves are expected to reach 3 million tons this year.

The purchase and storage policy will be concluded by the end of March this year, and the domestic cotton price will be running near the temporary storage price. The regulation effect is more obvious.

According to the purchase and sale data of the national cotton market monitoring system, if the storage capacity reaches 3 million tons, the total supply of cotton and the quota of imported cotton will be about 4 million 760 thousand tons in the latter part of this year. According to the current cotton level of textile enterprises, the demand in the latter stage will be roughly 4 million 680 thousand tons, and the supply and demand will be basically balanced.

According to the above data, if the reserves are significantly more than 3 million tons, the market supply will be slightly tighter if the cotton consumption is maintained at present level. However, there is no shortage of cotton both at home and abroad. According to the forecast of ICAC production and storage, in 2011/2012, the world's cotton production is more than 5 million 170 thousand tons except China. After the end of the purchase and storage policy, the reserve cotton stocks are abundant, and the state has strong market regulation and control capability.

Feng Mengxiao, director of the research center of cotton storage information center, believes that there is still a great potential pressure on cotton market. After the end of this year's purchase and storage policy, the cotton price will lose its policy support and the downward pressure will gradually appear. First, imported cotton has strong competitiveness in terms of price. At present, the price of imported cotton under Grade 3 cotton and sliding duty duty is less than 2400 yuan / ton. Second, the demand for cotton in the textile industry is weak and there is room for further compression. Third, cotton production and quality in this year increased significantly over the previous year. At present, only medium and high grade cotton with only public inspection has exceeded 2 million tons of reserves, so there will be a considerable number of middle and high grade cotton in the market after the purchase and storage.

Other analysts believe that Cotton purchase and storage price Will become the "bottom" of cotton prices, and the future consumption will determine the "height" of cotton prices. It should be the consumption situation that decides cotton price trend.

In March 12th, the Commerce Department of the Ministry of Commerce and industry of India officially announced the announcement of the lifting of the ban on cotton export issued in March 5th. Although the nominal ban has been lifted, the latest announcement has not yet fully liberalized India's cotton exports. The uncertainty of India's cotton export policy will also have an impact on the cotton market.