Analysis of Future Cotton and Textile Situation

In the new cotton year, how is the global cotton industry planted? What has been the demand for cotton products in the European and American consumer markets that have not fully escaped the financial crisis? These issues will not only affect the cotton price trend in the new season and the sales of cotton textile products, but will also affect the import procurement plans of China's cotton spinning companies.

Expected to slightly decline in production volume inventory continues to climb At this session, all parties concerned about the new year's cotton production expectations have given attention. According to the US Department of Agriculture’s forecast (according to the International Cotton Year from August 1 to July 31, 2013), the global and US cotton market will still be affected by climate, production and demand uncertainties in 2013/2014, 2013 /2014 The global cotton acreage is estimated to be 34 million hectares, a decrease of 1% (261,000 hectares) from the previous year, and the yield is expected to be reduced to 753 kilograms per hectare; despite the increase in production in India and Brazil, taking into account the United States and China’s cotton production Expected to decline, the annual global cotton production was 117.8 million bales, a decrease of 3% from the previous year.

The expected drop in cotton production did not eliminate the industry’s concerns about inventory growth. From the perspective of global cotton stocks, the market conditions have clearly exceeded supply. Relevant statistical forecast shows that in 2011/2012, global cotton stocks have increased by 5.6 million tons; in 2012/2013, global cotton stocks may increase by more than 3 million tons; in 2013/2014, it will increase by about 1.7 million tons. In the cotton season, global cotton consumption has grown by less than 200,000 tons. From this point of view, global cotton production has been surplus.

Tan Andong, chief executive officer of Alan Cotton, said that in the balance between supply and demand of cotton in the world, the global ending stocks in 2011/2012 have grown to 92.7 million bales, reaching the highest level in history, and are approaching annual consumption. Such stocks are The entire cotton industry is clearly too high, and will lead cotton farmers and cotton spinning companies can not predict the next cotton price trend.

Drought and monsoon impact Main cotton production Domestic cotton production forecast for the new year. Ray Butler, chief editor of the UK's Cutrum Corporation, said: “The output of cotton is closely related to the climate and the willingness of cotton farmers to plant, and it is expected that the US cotton production will decline. India’s cotton production slightly increased slightly, and Brazil’s cotton production is expected to rebound sharply due to the favorable factors for postponement of the cotton planting period.”

As the third largest cotton producing country in the world, the 2013/2014 US cotton production is expected to reach 3 million tons, down 19% from the previous year. The Cotton Outlook Committee of the US Department of Agriculture** Carol Skelly pointed out that the decline in US cotton production was mainly due to two reasons: First, the prices of all alternative crops are relatively high, which will reduce the cotton planting area; the second is the southwestern United States The main planting area continues to be arid. The US Department of Agriculture's forecast in May showed that if the drought persists, the willingness of cotton growers in the United States will continue to decline, which will lead to a 10% decline in the cotton planting area in the new year.

Unlike the United States, Indian cotton farmers have grown their enthusiasm for planting cotton because of their considerable income. If the monsoon volume is normal, India’s 2013/2014 cotton production is expected to reach 27 million bales, which is 2% higher than the previous year. RayButler said: "India has already started planting genetically modified cotton, but its current share is small, so it has limited impact on the overall cotton production. However, if India wants to continue to expand cotton production, its industrial technology and crop management system still need to be improved."

Particularly worth mentioning is the Brazilian cotton market. Due to its location in the southern hemisphere, relatively delayed planting time will help it obtain supply and demand information in the cotton market, which will help it make necessary adjustments to planting decisions, reduce risks and maximize profits. RayButler estimates that the Brazilian cotton harvest area in 2013/2014 is close to 1.1 million hectares, an increase of 22% over the previous year, and output will also pick up.

Emerging markets will hold up cotton consumption In addition to output and inventory, the cotton industry is also paying close attention to the trend of end-use consumption. As the economic recovery is expected to increase, the consumption of cotton products in the new year and its positive impact on the consumption of stocks are expected to be high. According to the Cotton Outlook Committee of the US Department of Agriculture, Carol Skelly, the amount of cotton used by US consumers has been declining over the past few years. In 2012, the per capita cotton consumption was only 11.7 kg. The main reason for this phenomenon was that man-made fiber products gradually replaced cotton products. However, she believes that the use of cotton by US consumers in 2012/2013 and 2013/2014 will gradually recover under the circumstance that the good characteristics of cotton products are becoming increasingly known.

In the new year's cotton consumption, research institutions and business representatives are generally optimistic about the performance of emerging markets such as India, Bangladesh and Vietnam. According to Chirag Lakhani, a DML group director, India is the world’s second largest cotton producer, consumer, and exporter. Benefiting from the rapid economic development, India's textile industry is constantly moving to the upper reaches of the value chain. Local demand for Indian cotton was strong in 2012/213, and domestic consumption has increased by more than 1.7 million bales. If India's investment policy is further liberalized, its cotton consumption is likely to overtake the United States in the coming years. At the same time, the consumption of cotton products in Bangladesh and Vietnam also grew strongly. RayButler pointed out that due to relatively low labor costs, the amount of foreign investment in these two countries has gradually increased, and the development speed of its cotton spinning industry has accelerated. In the past seven years, Vietnam’s cotton consumption has increased by a factor of two.

Cotton is a popular fiber variety, and recent research confirms this. According to the "Lifestyle" survey conducted by the American Cotton Corporation and the American International Cotton Association, consumers are paying more and more attention to value. In Italy, although the number of garments purchased by consumers is decreasing, the quality of clothing is improving, and garments that can demonstrate taste are most favored by consumers. Participants pointed out that to restore the status of cotton in the apparel and home apparel industry, it is necessary to create and reshape market demand, so that consumers, brands and retailers understand the value and importance of cotton and recover lost market share.