Observing The Trend Of The Global Cotton Market And Analyzing The Expectation Of The "Golden Nine And Silver Ten" Peak Season Failed Again

The global cotton production forecast was further reduced, and the attention of monetary policy trends increased. Recently, American cotton began to be picked. According to the report of the United States Department of Agriculture, as of September 8, the picking rate of American cotton was 8%, 1 percentage point higher than the previous year; The excellent rate was 40%, 4 percentage points lower than last week. The heavy rainfall from Hurricane Francine landing in Louisiana and Mississippi is not conducive to cotton boll opening and picking, and the degree of impact has yet to be assessed.

According to the September supply and demand forecast of the US Department of Agriculture, the global cotton output in 2024/25 will be 25.35 million tons, a quarter on quarter decrease of 260000 tons, of which the US cotton output will be reduced by 130000 tons again; The consumption was 25.2 million tons, a month on month decrease of 100000 tons. Global cotton supply tightened slightly, providing some support for international cotton prices, but the trend of weakening demand is still worrying.

In terms of macro-economy, according to the data of the US Department of Labor, the US consumer price index rose 2.5% year-on-year in August, and the inflation rate fell to the lowest level since 2021. On September 12, the European Central Bank announced its second interest rate cut this year. The market believes that the US Federal Reserve's interest rate cut in September is a highly probable event. In the short term, the market has digested the bullish sentiment of the US Department of Agriculture's supply and demand forecast data. It is expected that cotton prices will remain volatile. If the US monetary policy changes, it will help ease the market's concern about economic slowdown. The Federal Reserve's interest rate meeting will be held after the festival, and the market's attention is rising.

The domestic cotton price trend continues to bear pressure. Preparations such as maintenance of Xinjiang Ginning Plant have been basically completed, and the large-scale picking of new cotton is expected to start in late September. The cotton growth in most of Xinjiang's production areas this year is better than that in the same period last year, and the probability of cotton production increase is expected to be high. Due to the high temperature, drought, precipitation and waterlogging in some areas this year, the premature senescence of cotton fields has increased, and the cotton yield increase is expected to remain variable.

The purchase of hand picked cotton has been launched in a few cotton regions in southern Xinjiang, and the price is 6.2-6.5 yuan/kg. Considering the cost difference between hand picked cotton and machine picked cotton and the continuously depressed cotton price this year, the market generally expects the purchase price of machine picked cotton to be about 5.5 yuan/kg this year. In the downstream market, textile mills reflected that the seasonal order recovery was limited, the expectation of the "golden nine and silver ten" peak season fell again, the willingness of terminal purchase slowed down compared with the previous two weeks, and the market performance continued to differentiate. Large textile mills had a high start-up rate, the finished product inventory was slowly digested, small enterprises still had difficulty in receiving orders, and the capital turnover was still poor.

In general, the listing of new cotton is imminent, the purchase price of seed cotton is expected to be low, the downstream textile demand is insufficient, and the domestic cotton price may continue to be under pressure. In addition, on September 13, China announced the final measures to raise some 301 tariffs on China, and imposed additional tariffs on medical products such as electric vehicles, solar cells, key minerals and masks produced in China. Although the direct impact of this tariff increase on China's cotton textile exports is limited, the prospect of China's textile and clothing exports to the United States is not optimistic under the situation of the escalation of Sino US trade friction.