On August 12, the USDA supply and demand forecast that the market is looking forward to was released. According to market surveys, analysts generally expect that U.S. cotton production will be reduced, exports will be increased, and global inventories will increase. U.S. cotton production is expected to be 17.2 million bales, a decrease of about 300,000 bales from last month’s estimate. Therefore, U.S. cotton ending stocks It should drop to 6.3 million bales, down from last month’s estimate of 6.8 million bales. At the same time, affected by the epidemic, global ending stocks are expected to increase by 530,000 packages.
Unexpectedly, last night’s USDA supply and demand forecast was far from market expectations, which was a huge negative for the cotton market. Not only did U.S. cotton production not decrease, but it was increased to 18.08 million bales. As the U.S. farm abandonment rate increased from 16% to 24%, the U.S. cotton yield per unit area increased by 14% compared with last year. The production reduction caused by the hurricane in Texas is completely worth mentioning. Due to the surge in production, U.S. ending stocks increased from 6.8 million bales to 7.6 million bales. At the same time, global consumption was reduced by 1.24 million packages, and ending stocks increased to 104.91 million packages, an increase that exceeded market expectations.
On August 12, after the USDA supply and demand data was released, ICE futures fell sharply, and the December contract gave up the gains of the previous two trading days. Ed Jernigan, CEO of Cotton Supply Chain Management, said that U.S. cotton is currently much more expensive than Brazilian cotton, and countries are buying cheaper cotton, which has also pushed up U.S. cotton stocks. Regarding this Friday’s evaluation of the first phase of the Sino-US agreement, although the outside world generally believes that China will continue to implement the agreement, he believes that the focus of the negotiations is soybeans and corn, because China has purchased a large amount of cotton. In order to fulfill the agreement, it will only need to Buy more. Overall, the market is cautious. It is reported that the meeting will last from Friday to the weekend.
For this week’s US cotton export weekly report, the market continues to expect China to continue to sign a large number of contracts, but more importantly, whether a large amount of unshipped cotton from the previous year will be carried over to this year or cancelled.
After this adjustment to the supply and demand forecast, global supply has become clearer in the new year, and supply in the United States and the world has become looser, putting new pressure on fundamentals. Cotton prices continue to advance despite the slow recovery of cotton consumption. resistance increases. </p
