Downstream consumption of cotton is still "old"

At present, there has not been any significant improvement in the textile consumer market. With the increase in the supply of new cotton, it is expected that the cotton price will continue to decline in the short term, and the downside depends on the willingness of buyers and other buyers of textile companies. It is understood that many textile companies are quite satisfied with the current prices and do not rule out the possibility of purchasing in the near future.

Foreign cotton continued to be weak. The latest global cotton supply and demand report of the US Department of Agriculture was released on the 11th. In 2014/2015, global cotton production was raised by 52,000 tons, while consumption was only increased by 37,000 tons. In an overall conversion, the global supply of cotton continued its loose pattern and surplus. 12.53 million tons. In addition, the USDA also increased global ending stocks of cotton to 23.375 million tons. In the current global consumption is still weak, it is expected that ICE contracts will continue to pressure down.
This year China's cotton import quota policy has tightened. Except for the 194 million tons quota, it is very likely that no other quota will be issued. This puts importers and textile companies away from the expectations of the far-off ship. According to feedback from port traders and domestic textile enterprises, since November, the number of cotton outside the main port of China has continued to decrease, and the total amount has dropped to ** 10,000 tons.

The willingness of textile companies to make up the inventory is not strong According to the latest statistics from WIND, the industrial added value of textile industries above designated size in October increased by 6.3% year-on-year, an increase of 1 percentage point from the previous month. However, from the year-on-year trend of the increase in value of China's textile industry in the past three years, the current value-added of the textile industry continues to remain low.
In October, the purchasing managers index (PMI) of China's cotton textile industry was 46.0%, up 5.8 percentage points from the previous month. The new orders received by cotton spinning companies improved this month. This is also the decline in yarn and grey stocks of textile enterprises in October. The main reason is. With the lapse of the consumer season, it is expected that the increase in new orders in the market will be limited. In October, China exported US$26.538 billion worth of textiles and garments, a decrease of 7.05% compared to the previous quarter, which was a consecutive two-month decline.
At present, the consumer does not give power, and the enthusiasm of the textile companies to make up the library is not high. According to the survey data of China Cotton Information Network, as of the end of October, the stock of textile enterprises in the warehouse was 482,200 tons, an increase of 0.47 million tons from the previous month. Among the companies surveyed, 36% reduced cotton inventory and 44% increased cotton inventory. In October, the textile industry’s inventory of cotton industry increased slightly. On the one hand, the previous textile mills experienced a blank period of cotton raw materials. Most of the enterprises were short of cotton. When the new flower was listed, the new cotton with better quality was used to restock; In the early days of the new flower market, textile companies went to Xinjiang to purchase high-quality and new flowers to prevent the decline in the quality of cotton coming into the market later.

High inventory constraints cotton upside According to the latest data from the USDA forecast, China's cotton supply and demand in 2014/2015 was tightly balanced, and the cotton surplus was adjusted to 2.09 million tons from 2.694 million in 2013/2014. In terms of ending stocks, although the 2014/15 fiscal year has been reduced by 120,000 tons compared to the previous year, it is still a huge amount of 13.533 million tons, far exceeding the cotton consumption for one year. Therefore, high inventory will continue to restrict the upside of China's cotton prices.
To sum up, under the background of the continuous high inventory at the end of this year's cotton market in China and the current downstream textile consumption is still not obvious, it is expected that the cotton price will continue to be under pressure in the later period. In addition, attention is paid to the purchasing trends of downstream textile companies. After all, the Zheng cotton price and the spot cotton price are inverted. When the Zheng cotton price is significantly lower than the spot price, it is still attractive for the textile companies.