India's Cotton (17435,25.00, 0.14%) output accounts for 24% of the global output, China accounts for 23% of the global output, and the United States accounts for 14% of the output. China's cotton consumption accounts for 1/3 of the total global consumption, while domestic imports account for 1/4 of the total domestic demand.
Because the import volume accounts for a large proportion, the domestic cotton price follows the US market more obviously. When it comes to the US market, we have to say the monthly report of USDA.
According to USDA's global supply and demand balance sheet in August, global cotton production increased by 7.5%, consumption increased by 16% and ending inventory decreased by 6.55% year-on-year. In August, USDA reduced the global cotton output by 120000 tons in 2021/22; Increase global cotton consumption by 40000 tons in 2021/22; Reduce the global cotton final inventory by 110000 tons in 2021/22. The overall positive cotton price.
At present, it is the harvest time for China, the United States and India, focusing on the output of the three countries.
Compared with the same period in August, the United States and India both showed low production and high demand. China's production and demand are increasing, which may be related to the epidemic control. China's agricultural production has not been greatly affected by the epidemic.
At present, the global logic is that the production of agricultural products is reduced and the price is moved up. It is also a soft commodity. White sugar (5581, -26.00, -0.46%) seems to be less willing to follow the rise of the external market than cotton, which may be caused by high domestic inventory. Is there a similar problem in the demand for cotton?
In July, cotton commercial inventory was at the low point of the first two cycles. Similarly, the price rise also verified the state of acceptable demand.
From the perspective of textile sales and exports, although the year-on-year growth rate is insufficient, it is still at a normal level, which is different from the situation of white sugar.
In recent years, the external price difference is stronger than the internal price, maintaining import profits. In the first half of the year, with the rise of domestic cotton prices, the internal and external price difference was in a high position, and the import profit window continued to open. With the increase of imports, the global export pattern has changed, driving the external cotton price and supporting the domestic price.
There seems to be a difference between white sugar and white sugar: the shortage of white sugar abroad is more serious than that at home, which leads to the inversion of imports, while cotton does not. The domestic demand for cotton is better than that of white sugar, or there is no export at the downstream of white sugar, while the textile export at the downstream of cotton plus domestic demand is not bad. The epidemic has a great impact on catering, and clothing can be purchased online. With the improvement of people's awareness of health, the demand for cotton increases and the demand for sugar decreases, which is not irrelevant.
When the grey cloth inventory decreases, if the textile enterprises have no time to replenish the inventory, the cotton inventory will also decline, and the market will enter the rapid rise stage. Then the grey cloth inventory will accumulate. The enterprises are optimistic about the future market, and begin to replenish the cotton, and the cotton inventory will also increase. If the grey cloth inventory can decrease in the future market, and the industry enters a virtuous circle, the market will continue. If the grey cloth sales are blocked, the market may end.
When the grey cloth inventory drops and the textile enterprises begin to replenish the cotton inventory, once the grey cloth inventory accumulates, the textile enterprises are caught off guard, and the market will also come to an end, just as the high level fell in June of 2018. After that, no matter which side accumulates the inventory, it will be a blow to the market.
Textile enterprises' cotton and grey cloth inventories rise one after another in the case of a virtuous cycle. Cotton inventories decline, grey cloth inventories rise, and vice versa. If this virtuous cycle is broken, it may enter the end of the market. At present, after a virtuous cycle, grey cloth and cotton stock increase at the same time. Once the grey cloth inventory is difficult to decline, the high level of cotton may fall, and the grey cloth inventory will rise instead of falling for the first time in six years, which is not a good phenomenon.