Market Analysis: Analysis Of Cotton Supply And Demand In March

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Domestic market: the cotton supply is abundant, and the demand for textile orders in summer has increased slightly. In addition, the cotton fabric inventory is low, and textile enterprises have a demand for replenishment. It is expected that the domestic cotton price will fluctuate slightly in the near future. International market: Brazil and India increased cotton production, the drought in the United States eased, the global cotton supply situation turned loose, and the demand side recovered slowly. It is expected that the recent international cotton price will be weak and volatile.

（1） Domestic cotton prices rose slightly. The processing of new cotton has basically ended, a large number of imported cotton has arrived in Hong Kong, and the cotton supply is abundant; The new orders of downstream textile enterprises were less than expected, but due to the relatively low cotton inventory, the willingness to purchase raw materials increased, and the domestic cotton price rose slightly. According to the data of the national cotton market monitoring system, as of the beginning of March, the average number of days for the cotton inventory of the sampled enterprises was about 35.9 days, 2.4 days less than the previous month, 5.3 days less than the average level of the same period in the past five years; Enterprises preparing to purchase cotton accounted for 46.2%, up 2.3 percentage points month on month. In March, the average monthly price of domestic 3128B cotton was 17162 yuan per ton, up 0.4% month on month and 11.5% year on year. The monthly settlement price of the main contract of Zheng Mian Futures (CF405) was 15895 yuan per ton, down 2.0% month on month and up 11.0% year on year.

（2） International cotton prices rose month on month. As of March 21, the cumulative net contracted exports of the United States in 2023/24 were 2.512 million tons of cotton, up to 93.8% of the annual expected exports. The supply of American cotton was tightening. In addition, the U.S. Department of Agriculture reported in March that it would increase global consumption and trade, and reduce ending inventory. The international cotton price continued to rise. In March, the monthly average price of Cotbook A index (equivalent to 3128B cotton in China) was 100.25 cents per pound, up 1.5% month on month and 5.2% year on year.

（3） The difference between internal and external cotton prices has widened. Cotbook A index (equivalent to 3128B cotton in China) is equivalent to 15699 yuan per ton, 1463 yuan lower than the 3128B cotton price index in China (CCIndex), and the price difference is 125 yuan lower than that in the previous month. The average monthly price of imported cotton in FCIndex M (equivalent to 3128B cotton in China) is 104.70 cents per pound. The 1% tariff discount, after tax, is 18245 yuan per ton, 1083 yuan higher than the domestic price, and the price difference is 634 yuan larger than the previous month; The sliding allowance tax discount CIF price per ton is 18372 yuan, 1210 yuan higher than the domestic price, and the price difference is 627 yuan larger than the previous month.

（4） In February, cotton imports and textile and clothing exports decreased month on month. As the end retailers in Europe, America and other countries have been slow to go to the warehouse, the export of textiles and clothing has declined significantly. According to the data of the U.S. Department of Commerce, the retail sales of clothing and clothing accessories in the United States in February were 26.29 billion dollars, down 0.5% month on month and 0.5% year on year; In January, the inventory of American clothing and clothing accessories retailers was $61.31 billion, up 0.03% month on month and 0.9% year on year. According to the customs statistics, in February, China imported 294800 tons of cotton, a decrease of 14.5% month on month and a year-on-year increase of 2.5 times; Exports of textiles and clothing totaled US $17.766 billion, down 35.0% month on month and up 26.8% year on year. In January and February, China imported 639600 tons of cotton, a year-on-year increase of 1.8 times; Exports of textiles and clothing reached US $45.095 billion, up 13.8% year on year.

（5） The spinning volume increased year on year, and the yarn price rose slightly month on month. According to the data of the National Bureau of Statistics, China's yarn output in January and February was 3.364 million tons, up 0.7% year on year. The rising cost of cotton raw materials and the low inventory of cotton cloth led to a small increase in yarn prices. According to the data of the Inventory Survey Report of China's Cotton Industry, at the beginning of March, the yarn production and sales rate of the sampled enterprises was 99.7%, 3.5 percentage points higher than the average level in the same period of the last five years. The inventory sales volume was 26.2 days, 3.2 days higher than the average level in the same period of the last five years; The distribution production and sales rate was 98.3%, 7.5 percentage points higher than the average level of the same period in recent five years. The inventory sales volume was 35.3 days, 7.9 days lower than the average level of the same period in recent five years. In March, the average price of 32 pure cotton combed yarns of the main representative varieties was 23367 yuan per ton, up 0.2% month on month and down 0.4% year on year.

（6） The global cotton consumption and trade volume increased, and the ending inventory decreased. Due to China's cotton production reduction and consumption recovery, China's cotton imports increased significantly, driving global cotton consumption and trade. The US Department of Agriculture (USDA) predicted in March that the global cotton output in 2023/24 would be 24.593 million tons, an increase of 28000 tons over the previous month; The consumption was 24.591 million tons, an increase of 105000 tons over the previous month; The trade volume was 9.420 million tons, an increase of 85000 tons over the previous month; The ending inventory was reduced to 18.146 million tons, and the global inventory consumption ratio was 73.79%.

（7） It is expected that the domestic cotton price will fluctuate strongly and the international cotton price will fluctuate weakly in the near future. Domestic market: the processing of new cotton is basically completed, a large number of imported cotton arrive in Hong Kong, and the cotton supply is abundant; The demand for textile orders increased slightly in summer, coupled with the low inventory of cotton cloth, and textile enterprises have a demand for replenishment. It is expected that the recent domestic cotton price will fluctuate slightly. International market: Brazil National Commodity Supply Company and Indian Cotton Association recently raised the output of Brazilian cotton and Indian cotton to 3.56 million tons and 5.26 million tons respectively in 2023/24, an increase of 270000 tons and 260000 tons respectively compared with the last time. The drought in the United States has eased, the global cotton supply situation has turned loose, and the demand side has recovered slowly. It is expected that the international cotton price will be weak in the near future.