Market Analysis: The Market Will Fluctuate Due To The Decline Of Cotton Planting Area Across The Country

Since April, strong wind and sand dust weather have frequently occurred in southern Xinjiang, and rainfall and cooling weather have repeatedly occurred in northern Xinjiang, resulting in a delay of about 10 days from the previous year in cotton planting progress in Xinjiang. At present, although the sowing progress in southern Xinjiang is faster than that in northern Xinjiang, some early sowing cotton fields have sprouted, but some areas need to be remedied and reseeded due to soil hardening, film mulching and some young seedlings damaged. Based on the field visit of the reporter from China Cotton Network and the preliminary results of the National Cotton Market Monitoring System's Survey on the Basic Situation of the National Cotton Planting Area, it is predicted that the national cotton planting area is expected to decrease by 10.3% in 2023, which is 5.4 percentage points more than the results of the survey on the intended cotton planting area released in March.

In this context, considering that some processing enterprises in Xinjiang have upgraded their equipment and improved their production efficiency since this year, the probability of Xinjiang cotton harvest in the new year is expected to increase, reminding enterprises to guard against such risks carefully.

Based on relevant special surveys and analysis of economic environment and market conditions at home and abroad, the forecast of China's cotton production, sales and stock in 2022 by the national cotton market monitoring system in this period remained unchanged from the previous month. At the same time, China's cotton production, sales and stock forecast for 2023 was released for the first time, as follows:

In 2023, China's cotton inventory at the beginning of the period will be 6.182 million tons, an increase of 894000 tons or 16.91% year on year; The output was 6.17 million tons, a year-on-year decrease of 549000 tons, or 8.17%; The import volume was 1.7 million tons, a year-on-year decrease of 50000 tons, or 2.86%; Cotton consumption was 7.8 million tons, an increase of 250000 tons or 3.31% year on year; The inventory consumption ratio at the end of the period was 79.69%, 1.92 percentage points lower than that of the previous year.

To sum up, according to the prediction of the U.S. Department of Agriculture, there may be a gap between production and demand of global cotton in the new year, which is in sharp contrast to the situation that production exceeds demand this year. It is expected that the cotton price in the new year will be higher than this year as a whole. At present, cotton planting in the northern hemisphere is nearing the end, and cotton will enter a critical growth period. Climate change is still one of the main factors affecting the trend of cotton prices. At the same time, the global economy is facing increasing uncertainty, and the prospects for cotton consumption are not optimistic.

On the whole, cotton prices may fluctuate significantly due to the above factors in the near future.