Sino US Trade Friction Has An Important Impact On Global Cotton Supply And Demand.

 

Meanwhile, 2019/20 cotton production is expected to be particularly high in the year. In addition, initial inventory, export volume and ending inventory were all raised. As cotton planting area and unit yield increased slightly last month, the US cotton output increased 2.4% in 2019 to 4 million 903 thousand tons, a 14 year high. As US cotton exports were lower than expected in 2018/19, the US cotton stocks increased by 54 thousand tons at the beginning of the year. US cotton exports increased by 44 thousand tons in 2019/20, and the final inventory increased by 109 thousand tons to 1 million 568 thousand tons. Cotton growers are expected to earn an average price of 60 cents / pound in 2019/20, down 3 cents / pound from last month.

 

The trade environment will rise again.

 

Since the second half of last year, Sino US trade friction has had an important impact on global cotton supply and demand. In the early August, the trade environment deteriorated again. The US side announced that it would impose a 10% tariff on imports of 300 billion US dollars in September 1st, including all textiles and clothing. Under this influence, global cotton prices have plummeted.

 

In mid August, the Chinese side made solemn representations on the US side's proposal to impose tariffs on Chinese exports to the US in September 1st. On the 14 day, the US trade representative's office said it would postpone tariffs on some Chinese products until December 15th. Cotton prices were once lifted. However, after careful analysis of the list of goods, it is found that knitted clothing still exceeds 80%, which needs to be taxed in September 1st, and about 65% of other textile products will be taxed in September 1st. Therefore, for textile and clothing, most products still need to increase taxes in September, and the latter part is relatively small.

 

Domestic demand is weak for a long time.

 

From the domestic situation, the average price of reserve cotton continues to fall, and the price of 3128 has fallen from 13742 yuan / ton in August 1st to 13144 yuan / ton on 20 days. Textile exports improved in July, but overall they are not optimistic. In July, the export of textile yarns, fabrics and products was 10 billion 760 million US dollars, an increase of 6% over the same period last year. The cumulative value of that year increased by 1.35%, and the export garments and accessories 16 billion 745 million dollars, down 0.22% from the same period last year. Total exports of textiles totaled $151 billion 740 million in the same period, down 1.7% from the same period last year. In terms of domestic sales, domestic clothing retail sales amounted to 66 billion 50 million yuan in July, and accumulated 541 billion 590 million yuan in that year, down 0.84% compared with the same period last year, indicating that domestic sales are not optimistic.

 

Global economic growth is weak, textile consumption is expected to decline, and 2019/20 global end inventory is shifting from stock to exhausted inventory. I believe that even if trade frictions can be alleviated, cotton prices will not rise substantially. It is expected that the Zheng cotton 2001 contract will continue to be weak. If the commodity tariffs are formally added in September, it may fall again.