At present, the global economy continues to recover and has not yet returned to the level before the epidemic. Under the loose tone, the differentiation of global monetary policy has accelerated, and various uncertain factors have not yet settled. Cotton prices have risen to the highest level since the epidemic. New cotton alternate key period, the next step of the market trend, this issue of the monthly report will be discussed.
1、 International cotton price fluctuates upward Since the beginning of June, inflation in the United States has reached a new high, asset prices have continued to rise, and international cotton prices have followed the trend; During the period, the Fed's interest rate meeting suggested that the interest rate would be increased before the end of 2023, and the international cotton price had once declined; However, the US Federal Reserve has continued to moderate its interest rate hikes, reiterating that inflation is only a temporary phenomenon, and international cotton prices continue to climb to about 90 cents / pound. As of July 27, the settlement price of the main contract of ice cotton futures was 90.23 cents / pound, up 5.98 cents / pound, or 7.10%, compared with the beginning of June. The average international cotton index (m), representing the average CIF price of imported cotton in China's main ports, was 100.85 cents / pound, 8.88 cents / pound or 9.66% higher than that in early June. The RMB import cost of 1% tariff was 16084 yuan / ton, which was 1341 yuan / ton or 9.10% higher than that in early June. 2、 Domestic cotton price fluctuates upward After a period of decline, the domestic cotton price rebounded technically in early June. On June 11, Zheng cotton broke through 16000 yuan / ton; With the intensive introduction of the national policy of ensuring supply and price, the cotton price fluctuated and stabilized to 15400 yuan / ton; Since the end of June, with the rise of the external market, long funds have once again driven the domestic cotton price to rise sharply, breaking through the 17000 yuan / ton barrier, setting a new high since the epidemic. As of July 27, the settlement price of main cotton futures contracts in Zhengzhou Commodity Exchange was about 17480 yuan / ton, up 2010 yuan / ton or 12.99% compared with the beginning of June; The national cotton price B index (representing the price of 328 grade cotton in the mainland) was about 17440 yuan / ton, up 1688 yuan / ton or 10.72% compared with the beginning of June. The second part is the analysis 1、 Macro environment at home and abroad The Federal Reserve is faced with a dilemma as it is difficult to return the economic rescue policy. In the second quarter of 2021, although the economies of major economies continue to recover, they have not yet recovered to the pre epidemic level. At present, the policy of the Federal Reserve is faced with a dilemma. First, the labor shortage in the United States and the uncertainty of the new epidemic situation affect the recovery of enterprises and the economy; Second, inflation risk. US stocks have risen sharply to historical highs. In June, the US consumer price index reached the largest increase since 2008, which increases the necessity of the Fed's monetary tightening. We need to be alert to the asset adjustment risk brought by the early withdrawal of the Federal Reserve from easing policy or the slowing down of Liquidity Expansion margin. The marginal slowdown of domestic economic growth is beginning to appear, and the economic policy is mainly stable. According to the National Bureau of statistics, China's GDP growth rate was 7.9% in the second quarter (18.3% in the quarter and 5.5% in the two years), with steady economic growth and marginal slowdown. In May 2021, the state successively launched the policy of guaranteeing supply and stabilizing prices. On July 15, the central bank lowered the deposit reserve ratio of financial institutions by 0.5 percentage points. It insisted on the stability and effectiveness of monetary policy, and did not engage in flood irrigation, but made accurate efforts to increase support for small and micro enterprises. 2、 Analysis of supply and demand situation In the late period of the year, the global cotton inventory decreased, but it was relatively abundant in history; The weather in the northern hemisphere is normal, which is conducive to the growth of new cotton; The new cotton harvest in the southern hemisphere is progressing smoothly, and the global cotton production is increasing in the new year. 1. International cotton market supply The global cotton supply is relatively abundant in the second half of the year. According to the forecast of international organizations, by the end of August 2021, the global cotton inventory level will be between 1994 and 20.99 million tons, a year-on-year decrease of about 6%, 4.2-4.3% higher than the average of the past five years. After September 2021, cotton in the northern hemisphere will enter the harvest period. The global cotton production in the new year is estimated to be 25.59-25.99 million tons, with a year-on-year increase of 5-6%, and 0.8-1% higher than the average output in the past five years. With the weather in the northern hemisphere, the growth of new cotton is better. In recent weeks, the excellent rate of American cotton continued to improve rapidly. As of July 18, the growth status of American cotton accounted for 60%, with an increase of 15% over the same period of last year; India's monsoon rains and rains cover the whole country, prompting cotton planting to accelerate in an all-round way. As of July 19, the cotton planting progress in Gubang, India has reached 92%, with an accumulated area of more than 2 million hectares, an increase of 3% compared with last year. Cotton in the southern hemisphere is of high yield and high quality. According to the latest forecast of Brazil conab, the output of Brazilian cotton in 2020 / 21 will be 2.3424 million tons, an increase of 25000 tons compared with the previous forecast. With the advance of harvest, the main color grade of Brazil's new cotton is also above M grade; According to the cotton association of Australia, the yield per unit area in most parts of Australia is 10-15% higher than expected, and the total cotton production in Australia is expected to reach 609000 tons this year. 2. Domestic cotton supply situation At the end of the year, the speed of domestic cotton transfer to downstream was accelerated. According to the data of the national cotton market monitoring system, as of July 23, the total sales of lint cotton in the links of cotton processing enterprises in China were 5.916 million tons (output 5.95 million tons), an increase of 519 thousand tons over the same period of last year; According to the data of China Cotton Association, by the end of June, the total turnover inventory of cotton in China was about 2.219 million tons, which was lower than 214100 tons in the same period of last year; Textile mill raw material inventory increased, as of early July, the national cotton industry inventory 897000 tons, increased 266000 tons year on year. The reserve cotton will rotate 600000 tons, effectively meeting the cotton supply of textile enterprises before the new cotton listing. In order to optimize the structure of central cotton reserve and ensure good quality, the relevant departments of the state announced that from July 5, 2021 to September 30, 2021, the central cotton reserve plan will rotate about 600000 tons, which is conducive to the seamless connection between the new year and the new year for textile enterprises. The national cotton production is expected to decline in the new year. According to the latest survey data of the national cotton market monitoring system in July, the actual sown area of cotton in 2021 / 22 was 42.463 million mu, a decrease of 7% over the same period of last year; At present, the growth of cotton in China is good. Affected by the cotton replant in some areas of Xinjiang, the cotton growth progress is 7-10 days later than that in previous years. Under the premise of no major disasters in the later period, it is estimated that the national cotton output will decrease by 6.3% in 2021 / 22, about 5.578 million tons, 4.2% lower than the average level of the past five years. The global cotton consumption performance is different, the US consumption performance is good, the European Union clothing demand has not fully recovered, the new year's consumption is estimated to be 25.8-26.81 million tons, with a year-on-year growth rate of 0.78-3.8%. 1. Foreign cotton demand situation U.S. clothing consumption performance is good, there is still room for replenishment. According to the data of the U.S. Department of Commerce, the inventory sales ratio of clothing and clothing fabric wholesalers in the United States was 1.83% in May, significantly lower than 2.13% in the same period in 2019. There may still be room for replenishment in the clothing market. In June, the consumption momentum was good, and the retail sales of clothing and apparel increased by 2.58% month on month, 16% higher than the same period in 2019. European Union textile and clothing retail lacks follow-up consumption power. Due to the base effect of the same period last year, the EU textile, clothing and footwear retail sales in April 2021 increased by 130% on a year-on-year basis. However, from a month on month basis, after a rebound growth of 13.2% in February, the month on month decline continued from March to April, and the decline rate gradually expanded to 20.7% in April, indicating the sluggishness of the EU clothing retail market. 2. Domestic cotton demand situation (1) The rebound of domestic demand in the future is limited In the second quarter, affected by the rapid rise of the base number, the growth rate of clothing consumption decreased year on year. From January to February, March, April, may and June of 2021, the year-on-year growth rates of domestic clothing retail sales above designated size were 53.1%, 73%, 34.60%, 15.40% and 14.30%, respectively. The cumulative online clothing retail sales were 44.3%, 39.6%, 33.8%, 28.2% and 24.10% respectively. With the return of China's economy from rapid recovery to normalization, the growth of domestic demand will not change, but the growth rate may slow down. (2) China's clothing export advantage is prominent, and the continued momentum depends on the changes of overseas epidemic situation According to the data of China Customs, the export volume of China's clothing (including clothing and clothing accessories) from January to February, March, April, may and June of 2021 increased by 50.02%, 42.18%, 65.03%, 36.96% and 17.67% respectively compared with the same period in 2020. Compared with the same period in 2019, they increased by 15.83%, 6.87%, 15.01%, 0.08% and 5.66% respectively. If the epidemic situation in Southeast Asia is effectively controlled and the production capacity is gradually restored, orders will flow back, and China's clothing export will gradually return to its pre epidemic state. However, according to the recent survey of China cotton net, the resilience of foreign demand still exists. In July, 36.07% of enterprises received return orders from Southeast Asia, an increase of 13.85% compared with the survey in May. （3） Analysis of global and Chinese cotton market situation 1. Mutated viruses are constantly emerging and consumption is variable According to the forecast of international organizations, the global cotton inventory consumption in 2021 / 22 will decrease by about 6% compared with the same period of last year. ICAC's July monthly report predicts that the average value of the cotruk a index in 2021 / 22 will be 89 cents / pound, and 83.63 cents so far this year. The reason is that global cotton consumption and trade are expected to recover. Cotton consumption is closely related to the economic situation, and the epidemic situation affects economic recovery. The World Health Organization (who) warned on July 16 that there are four new coronavirus variants worthy of attention, which have led to the global virus pandemic trend, making the recovery degree of global cotton consumption uncertain. 2. The heat collaterals of cotton in the upper reaches are not smooth to the downstream According to the data of the National Bureau of statistics, the purchasing price of textile raw materials (ppirm) increased by 4.8% year-on-year in June, the ex factory price of textile industry increased by 3.8% year-on-year, while the ex factory price of textile clothing and clothing industry decreased by 0.4% year-on-year. At the end of July, the national cotton price B index rose again by 8.9% compared with the end of June, the index of 32 pure cotton combed yarn increased by 4.4%, and the cotton twill fabric only increased by 1.6%, indicating that the heat of the industrial chain is not balanced. 3. Market bullish mentality is common, but the depth is inconclusive According to the recent survey of China Cotton network, about 64% of the enterprises participating in the survey believe that the cotton price has a good trend. Among them, 44% of the cotton prices are stable and rising, and 20% are high prices; 24% of the respondents believe that the oscillation is stable, and the decline and uncertainty together account for 11%. 4. Periodic market volatility probability is large From the perspective of domestic supply and demand pattern, the decline of cotton planting area in the new year leads to the decline of cotton yield, which forms a certain support for the market expectation of new flowers before listing, and the weather change in the critical period of cotton growth becomes the focus. October to December is the northern hemisphere cotton scale listing period, in the late production of cotton does not occur under the premise of big accidents, do not rule out the possibility of cotton prices falling. Cotton consumption side by the external macro environment uncertainty is high. China's policy is intended to stabilize the market and will, to a certain extent, avoid the possibility of a sharp rise and fall in cotton prices. If there are a series of major changes in weather, epidemic situation and capital policy, the global capital market and cotton market will be adjusted. The third part is the production, sales and inventory forecast 1、 In 2021 / 22, the global cotton production and demand are basically flat, and the inventory consumption ratio at the end of the period decreases slightly The International Cotton Advisory Committee (ICAC) released the forecast data of global cotton production, sales and inventory in 2021 / 22. The global cotton inventory at the beginning of 2021 / 22 was 20.99 million tons, with a year-on-year decrease of 1.37 million tons or 6.13%; The global cotton output was 25.59 million tons, with a year-on-year increase of 1.37 million tons or 5.66 percent; The consumption was 2580 tons, with a year-on-year increase of 200000 tons or 0.78%; The inventory at the end of the period was 20.77 million tons, a year-on-year decrease of 220000 tons or 1.05%; The global demand for cotton production is less than 210000 tons, which is 1.17 million tons lower than that in 2020 / 21; The global cotton inventory consumption ratio at the end of the period was 80.5%, 1.49 percentage points lower than that in 2020 / 21. 2、 In 2021 / 22, the domestic cotton output will be reduced, and the inventory consumption ratio will be reduced Based on the relevant special investigation and the analysis of domestic and foreign economic environment and market situation, the national cotton market monitoring system predicted the domestic cotton production, sales and inventory in 2021 / 22 as follows: in 2021 / 22, China's cotton output was 5.578 million tons, with a year-on-year decrease of 372000 tons or 6.25%; The consumption was 8.24 million tons, with a year-on-year decrease of 150000 tons or 1.79%; The import volume was 2.31 million tons, with a year-on-year decrease of 546000 tons or 19.13%; The inventory at the end of the period was 6.21 million tons, with a year-on-year decrease of 390000 tons or 5.9%; The gap between production and demand was 2.662 million tons, 22.2 million tons larger than that in 2020 / 21, and the inventory consumption ratio was 75.44%, which was 3.29 percentage points lower than that in 2020 / 21.
To sum up, the current global monetary policy is divided under the loose tone, the capital market is running at a high level, but there are many uncertainties and fragility in the actual economic operation, which increases the complexity of the current round of market operation and brings certain difficulties to investors' expectations. Although the current cotton price has reached a new high since the outbreak, the market is troubled by the sustainability? Cotton market into the new year alternate time point, the weather is big uncertainty, need to pay close attention to. Before the new cotton scale listing, the market bullish sentiment is strong, the fund enthusiasm is high. In the second half of the year, the pace of domestic consumption needs to be further observed, and the development of foreign trade is still facing many unstable factors. If there is no obvious disaster, the evolution trend of epidemic situation does not deviate from the expected track and the capital market does not change significantly, cotton price is expected to gradually return to a reasonable range in the medium term.
