Market Analysis: Climate Change Directly Affects The Uncertainty Of Domestic And International Cotton Prices

 

Recent weather changes dominate the trend of international cotton prices. As for the cotton market, as of last week, the boll setting rate of American cotton was 90%, and the boll opening rate was 25%, which was flat compared with the average of the past five years. 33% of American cotton reached a good growth status, slightly worse than that of the previous year. The market focused on the improvement of drought in American cotton producing areas and the impact of hurricanes on the growth of new cotton. India has started cotton picking and purchase in the new year, and the purchase activity is expected to increase in mid September. According to the forecast of Indian meteorological department, the monsoon rainfall in July September this year may decrease by 8%, which is the lowest in recent 8 years. In terms of the textile market, Southeast Asia's textile and clothing exports continued to be sluggish. According to the Vietnam General Bureau of Statistics, Vietnam's exports fell 7.6% year-on-year in August, the sixth consecutive month of decline; Among them, the export of clothing production decreased by 5.8%, and the export of clothing from January to August decreased by 15% in total.

On the whole, the global economic downturn has dragged down the recovery of demand in the textile and clothing market. Recent weather changes have become the main driving force for the rise. It is expected that before the centralized listing of new cotton, the international cotton price may still be strong and volatile.

The new year started smoothly, and the cotton price trend is expected to be supported by acquisitions. According to the data of the National Bureau of Statistics, the purchasing managers' index (PMI) of China's manufacturing industry in August was 49.7%, up 0.4 percentage points from the previous month, and the prosperity level of the manufacturing industry further improved. However, insufficient market demand is still the main problem facing enterprises at present, and the foundation for the recovery and development of the manufacturing industry needs to be further consolidated. In terms of cotton market, Anhui, Hebei and other places began to open cotton bolls, and cotton farmers in some areas picked cotton sporadically.

According to the survey conducted by the Central Cotton Storage Information Center in August, the cotton in southern Xinjiang is generally growing well, the seed cotton yield has recovered, and the disease and insect pests are significantly reduced compared with those in previous years. It is expected that large-scale picking will begin around the middle of October. According to the textile market survey results of the National Cotton Market Monitoring System in August, the start-up rate of the surveyed enterprises has recovered, and the yarn inventory has increased, but nearly 90% of the enterprises are in a break even or have lost money, and the performance of domestic and foreign demand orders is poor year on year. More than half of them predict that the opening price of Xinjiang seed cotton will exceed 8 yuan/kg.

In the short term, considering that the "golden nine and silver ten" peak season has arrived, and the uncertainty of new cotton production still exists, the domestic cotton price has been supported to some extent at both the supply side and the demand side.