Jia Li, senior analysis of CCFGroup, delivers her report of 2022/23 China cotton market outlook.

Ms. Jia introduces her report into three parts.

The first part is the price review and analysis. She analyzes the price trends of ICE and ZCE cotton futures first, dividing the price trends since 2006 into four periods and analyzing the reasons. Then she introduces the basis trend and ZCE Sep/Jan contract spread and ZCE Jan/May contract spread, to find out the different and same points from the historical trend.

The second part is the cotton supply and demand situation. 2020/21 and 2021/22 cotton production, imports, consumption and ending stocks are analyzed, and the comparison of production, consumption and stock-to-use ratio since 2016/17 season is made. In 2022/23 season, China cotton production and consumption is projected to rise slightly, as well as stock-to-use ratio. Moreover, Ms. Jia makes an analysis of new cotton procurement, including the ginning factories change in Xinjiang and inland, and historical trend of ginners and cotton production, and expects a purchase price of new seed cotton. From the prospective of consumption, the year-on-year reduction of China cotton consumption has been much higher than 2019/20 season. She also analyzes the year-on-year change of textile and apparel exports in the first half year of 2022 and the international textile and apparel consumption. At last, Ms. Jia points out that spinning mills faces low feedstock inventory and high product inventory.

The third part is the conclusion. Ms. Jia points out that 2021/22 China consumption has reduced by 1.78 million tons year on year, and the reduction has been much higher than that in 2019/20 season, mainly caused by domestic demand. In 2022/23 season, supply is supposed to be loose with large quantity of old stocks and ample new cotton. Demand is likely to improve, but may continue to reduce year on year before the second quarter of 2023. Cotton prices still face upward pressure.