Cotton Consumption Is Not Strong, Downstream Needs Channel Expansion

Recently, China's textile enterprises have reduced the amount of cotton purchasing, and the downstream consumption of cotton has not been prosperous.

According to the insiders, the peak season for cotton consumption has passed.

The growth is limited.

With the increasing supply of new cotton, cotton prices are expected to remain downward in the short term.

Foreign cotton purchases will be reduced.

Reporters learned that China's cotton import quota policy has tightened this year. Apart from the quota of 894 thousand tons, 1% quotas will no longer be issued, which will discourage importers and textile companies from sailing for the coming months.

According to feedback from port traders and domestic textile enterprises, the number of cotton exports to main ports in China has continued to decrease since November, and the total volume has dropped to eighty thousand or ninety thousand tons.

Recently, the US Department of agriculture (USDA) released the latest global cotton supply and demand report, of which 2014/15's annual global cotton production increased by 52 thousand tons, while its consumption increased by only 37 thousand tons, and the global cotton supply continued to be relaxed and the surplus was 1 million 253 thousand tons.

In addition, USDA also raised the end of the world cotton inventory to 23 million 375 thousand tons.

At present, global consumption is still weak, ICE contracts are expected to remain under pressure.

Domestic cotton production has declined.

From the situation of cotton production and consumption in China (aside from reserve stock),

Output is 1 million 633 thousand lower than consumption. Output outside China is 2 million 886 thousand tons higher than consumption. Domestic supply and demand situation is better than international market.

According to the survey conducted by China Cotton Information Network in October, the output of cotton in China this year is 6 million 20 thousand tons, of which 4 million 80 thousand tons in Xinjiang.

This year, weather and the implementation of direct subsidy policy and other factors, the market buying and selling rhythm has changed.

Xinjiang was mainly affected by the weather in 9 and October, such as low temperature, rainfall and frost. The output of the northern Xinjiang decreased, and the southern Xinjiang was also affected.

The trend of inland production reduction can not be ignored.

The proportion of machine picked cotton in Xinjiang is expected to increase further in 2015/16.

Textile enterprises do not have strong willingness to replenishment.

WIND latest statistics show that in October, the added value of textile industry increased by 6.3% over the same period last year, an increase of 1 percentage points from September.

However, judging from the trend of China's textile industry added value in the past 3 years, the added value of the textile industry is still low.

Reporters learned that in October, China's cotton textile industry purchasing managers index (PMI) was 46%, an increase of 5.8 percentage points compared to September.

The new order situation of cotton textile enterprises improved in October, which is also the main reason for the decline of yarn and grey stock in textile enterprises in October.

Insiders said that with the passing of the peak season of consumption, the volume of new orders is expected to increase.

In October, China exported $26 billion 538 million in textile and clothing, a decrease of 7.05% in the annulus, which has been declining for 2 consecutive months.

At present, the consumption of cotton is not enough, and the enthusiasm of textile enterprises to replenishment is not high.

China cotton information network survey data show that as of the end of October, the textile enterprises in the stock of cotton is 482 thousand and 400 tons, an increase of 4 thousand and 700 tons from last month.

Of the surveyed enterprises, 36% reduced cotton inventories and 44% increased cotton inventories.

It is understood that the textile industry in October cotton industry inventories increased slightly, on the one hand, before the textile mill experienced a blank period of cotton raw materials, most enterprises are short of cotton, when the new flower listing, choose the new cotton quality replenishment stock; on the other hand, the new flower market early, textile enterprises have to Xinjiang to purchase high-quality new flowers, in order to prevent the quality of the late listed cotton.

Some analysts say that as the supply of new cotton increases,

Will also be downhill, and the downward trend depends on the willingness of buyers such as spinning enterprises.

It is understood that many textile enterprises are satisfied with the current futures price, and do not rule out the possibility of purchasing in the near future.