Economic Observation: Data Analysis Of Global Cotton Market Trend

international market

The cotton supply is still sufficient, and the market demand continues to be sluggish. New cotton is coming into the market in the southern hemisphere, and Brazilian cotton will start to harvest in 2023/24. According to the Brazilian National Commodity Supply Company (CONAB), as of June 23, the harvest rate of Brazilian cotton was 6.9%, 4.6 percentage points higher than that of the same period last year, and the pre-sale rate was more than 60%.

Recently, the continuous depreciation of the Brazilian currency real has strengthened Brazil's cotton export advantage. According to the data of the Central Bank of Brazil, the buying price of the US dollar against the real was 5.5223 on June 27, up 5.5% from the beginning of the month, putting pressure on international cotton prices. The US cotton planting in 2024/25 is coming to an end, and the seedling situation is better than the previous two weeks.

According to the US cotton growth report, as of June 23, the budding rate of US cotton had reached 28%, an increase of 3 percentage points year on year. 56% of the cotton grew well, an increase of 2 percentage points over the previous week. The cotton production is expected to increase strongly.

On June 28, the U.S. Department of Agriculture estimated that the actual cotton planting area of the United States in 2024 would be 11.7 million acres, far exceeding the market expectation of 10.8 million acres, with a year-on-year increase of 14%. Based on the average unit yield of U.S. cotton in the past decade of 855 pounds/acre, and the average abandonment rate of 15.5%, the U.S. cotton output in 2024/25 would reach 3.84 million tons, with a year-on-year increase of 1.21 million tons.

Last week, the contracted export volume and shipment volume of American cotton failed to continue the growth trend of the previous two weeks, indicating insufficient cotton consumption demand. It is expected that the international cotton price will continue to operate under pressure.

domestic market

Domestic textile off-season atmosphere is strong, and cotton consumption demand continues to be weak. The downstream cotton yarn market continued to decline. The operating rate of spinning and weaving enterprises continued to decline. The sales of finished products were not smooth, cash flow became increasingly tight, and cotton mills in some regions were increasingly exposed to high temperatures.

This week, the price of polyester staple fiber rose rapidly along with the price of raw material PTA, and the price difference between polyester and cotton narrowed to a low level of less than 8000 yuan/ton for more than a year. However, due to weak market demand, it did not significantly support the price of cotton.

The domestic cotton spot supply is sufficient, the port import cotton stock is high, and the downstream demand is poor, leading to the low willingness of enterprises to replenish the cotton stock.

According to the survey of cotton processing enterprises by the National Cotton Market Monitoring System, the domestic cotton sales volume this week was 67000 tons, the second lowest level in nearly three months. In terms of cotton production, the survey of the national cotton market monitoring system shows that the actual cotton planting area in 2024 will be 40.833 million mu, a year-on-year decrease of 1.4%, which is lower than the survey results of the intended planting area.

At present, some cotton fields in Xinjiang have entered the flowering and bolling period, and the cotton is growing well. According to the weather forecast, the recent high temperature weather above 35 degrees has occurred in most plain areas in Xinjiang, and the demand for field management and water resources has increased.

In the short term, the domestic cotton supply and demand situation has not changed significantly, and the price may remain volatile.