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Research | Time: Jan 27 2022 1:38PM  Editor:Dilys Wang
Global cotton: impetus from supply ends, high price drags down consumption
 
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I. Preface

In the beginning period of 2022, international cotton prices fluctuated upwards again. ICE cotton futures market has risen by over 5% within half a month, and part of cotton textile enterprises had confidence again, becoming tight sellers. Nevertheless, according to the data traced by CCFGroup, cotton arrivals in global major cotton producing countries have been drawing to a close currently. The impetus of harvest-rush and production reduction has weakened, while high cotton prices, insufficient energy supply and industrial policy change start to drag down the market. In the first quarter of 2022, global cotton prices are likely to fall down.


Contents

I. Preface

II. Impetus from supply side is ending

1. Global cotton prices move up significantly with the harvest-rush and production reduction expectations

2. Impetus from supply side is ending as harvests are virtually complete and new crop plantings have not started

3. Cotton prices diverge with different global supply and demand

III. High cotton prices drag down consumption

1. China: spinners face heavy losses, and cotton consumption is weak

2. India: ginning profits continue to shrink and the epidemic and tax drag down the consumption

3. Pakistan: spinners face heavy losses, and energy policy depresses consumption

4. Vietnam: yarn profits decline, and cotton import structure changes

5. Bangladesh and Turkey: cotton prices remain high, and imports fall down

6. International cotton prices are at a historical high

III. Conclusion


Charts

Chart 1. Price change of international spot cotton

Chart 2. Sowing progress of Brazilian cotton

Chart 3. Price ratio of Chinese cotton 3128 and Cotlook A under 1% tariff

Chart 4. Basis of imported cotton for nearby shipment

Chart 5. Theoretical profits of cotton yarn and blended yarn

Chart 6. Cotton inventory in spinning mills

Chart 7. Theoretical profits of Indian C32S and O/R of spinning mills

Chart 8. Theoretical profits of Pakistani siro-spun C10S and O/R of spinning mills

Chart 9. Theoretical profits of Vietnamese C32S and O/R of spinning mills

Chart 10. Cotton imports of Vietnam

Chart 11. Vietnam cotton imports by origin

Chart 12. Cotton import value of Bangladesh

Chart 13. Cotton import volumes of Turkey

Chart 14. USD equivalent price of international spot cotton


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