Market Trends: International Cotton Prices Will Maintain Weak Consolidation

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International cotton prices will remain weak consolidation. The euro zone inflation rate fell to 4.3% in September from 5.2% in August. The European Central Bank announced on October 26 that it would suspend interest rate hikes. As of September 2023, it has raised interest rates 10 times, totaling 450 basis points; The President of the European Central Bank said that the high interest rate may be maintained for a long time, which does not rule out the possibility of further interest rate increases. In terms of cotton market, the harvest of American cotton is still lagging behind, and the excellent rate of American cotton is lower than that of last year.

According to the data of the U.S. Department of Agriculture, as of October 22, 2023, the harvest progress of American cotton was 41%, 3 percentage points behind the same period last year; The excellent rate was 29%, down 1 percentage point year on year. According to the statistics of Pakistan Ginning Factory Association, as of October 15, the local new cotton market reached 1.019 million tons, nearly double the same period last year.

According to the data of Bangladesh Export Promotion Bureau, as of the first fiscal quarter in September 2023, Bangladesh's national textile exports fell by 46.39% year on year. Under the background of continued macro pressure and weak demand, it is expected that the international cotton price will be dominated by weak consolidation in the short term.

The domestic cotton price lacks the impetus to rise. According to the National Bureau of Statistics, the profits of industrial enterprises above designated size increased by 11.9% year on year in September; The cumulative year-on-year decrease from January to September was 9.0%, 2.7 percentage points lower than that from January to August.

In the cotton market, more than half of the new cotton is picked nationwide, and the seed cotton purchase market continues to play a game. As most cotton farmers in Xinjiang still have a large amount of cotton stored in the field, the progress of seed cotton sales has been accelerated but still slow. According to the data of the National Cotton Market Monitoring System, as of October 26, 2023, the picking progress of new cotton nationwide will be 67.5%, a year-on-year decrease of 6.0 percentage points, 11.8 percentage points lower than the average of the past four years; The national seed cotton sales rate was 55.2%, down 2.7 percentage points year on year, 22.3 percentage points lower than the average of the past four years.

As the cotton price fell and the textile market entered the off-season, the weaving and fabric factories were in a strong wait-and-see mood, and some enterprises cut prices to sell, expanding the loss. Faced with the situation of sufficient supply and weak demand, it is expected that domestic cotton prices still lack the impetus to rise.