Last night, the U.S. Department of Agriculture released its December global cotton supply and demand report. This report lowered global production and year-end stocks for 2021/22. Among them, the global cotton production estimate for 2021/22 is lowered to 121.57 million bales, and the November estimate is 121.79 million bales. The global end-of-year cotton inventory data for 2021/22 is lowered to 85.73 million bales, compared with 86.93 million bales in November. At the same time, the US cotton production data for 2021/22 was announced as 18.28 million bales, compared with 18.2 million bales in November.
Overall, the results of this report are within market expectations. On December 10, domestic and foreign cotton futures continued to fluctuate. For the domestic market, short-term purchases and sales are not smooth, causing conflicts among all parties. As of December 8, the cumulative processing volume of lint cotton in Xinjiang has reached 3.94 million tons. Due to the inversion of futures prices, companies have difficulties in hedging, which has led to increased shipping pressure on the supply side and the outflow of spot goods has encountered a “bottleneck”. On the demand side, textile companies have accumulated a large amount of gauze product inventory, and some companies have even reached historical highs. In order to withdraw funds before the year, some cotton yarn trading companies accelerated the sales of goods, causing spinning manufacturers to cut prices.
According to CCTV News, as of 3 pm on December 9, Ningbo, Shaoxing and Hangzhou in Zhejiang Province had reported a total of 24 confirmed cases of COVID-19 and 35 asymptomatic infections. Epidemics have occurred one after another in domestic textile consumption areas, making cotton consumption even worse. The recent increase in export sea freight and the appreciation of the RMB have all brought challenges to cotton consumption. Recently, some textile companies have said that terminal consumption is not strong, and the Spring Festival is coming early this year, and they are considering taking an early holiday. Due to the sluggish shipment situation, cotton ginning companies will also take holidays early, and lint sales may be delayed.
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