Data From USDA Global Cotton Supply And Demand Report Shows That Cotton Prices Fluctuate

In November, the USDA global cotton supply and demand report was released, and the global cotton output, consumption and ending inventory in 2024/25 were all reduced; At the same time, the US cotton output and export volume decreased, and the ending inventory increased. The data in the report is both empty and full, which does not give a clear trend guidance to the cotton market. In addition, the short-term macro market, the Federal Reserve's interest rate cut again, the rise of the dollar and other factors have limited disturbance. The price of American cotton in the external market may fluctuate in the range.

The global cotton output, consumption and ending inventory in 2024/25 are all reduced

According to the November cotton supply and demand report of the US Department of Agriculture, the global cotton output, consumption and ending inventory in 2024/25 have all decreased to varying degrees. In November, most of the cotton in China, the United States, India and other places in the northern hemisphere has been harvested, and the global cotton production data will also be more clear. In the November supply and demand report released by USDA, the global cotton output in 2024/25 is 100000 tons lower than that in October, to 25.295 million tons; In addition, the global cotton ending inventory decreased by 125000 tons, which also provided some positive support for the market. However, global cotton consumption continued to decline in November, offsetting the positive impact of lower output and ending inventory.

US cotton output and export volume decreased, and ending inventory increased

The supply and demand report of the US Department of Agriculture in November also reduced the US cotton output by 2000 tons to 3.09 million tons. The main reason for the reduction is that the output of Texas in the US dropped significantly. Although the output of Georgia increased, it did not offset the impact of the overall output decline. Although the decrease in output has more impact on the market price, the decrease in the export volume of American cotton and the increase in the inventory at the end of the period have made the industry worried about whether the export task of American cotton can be successfully completed this year and whether the pressure on high inventory will be increased. According to the data released by USDA, the export volume of American cotton in November decreased by 44000 tons to 2.46 million tons, and the ending inventory increased by 43000 tons to 936000 tons.

Market factors are intertwined, and cotton prices fluctuate

The data of the US Department of Agriculture's supply and demand report in November were mixed, which did not give a more obvious trend guidance to the market. In addition to the influence of fundamental factors, market participants also pay more attention to market macro factors. On November 8, the Federal Reserve Board of the United States announced that it would cut the target range of the federal funds interest rate by 25 basis points to a level between 4.5% and 4.75%. The market again became more bullish because loose liquidity would stimulate the demand for American cotton. However, the rise of the US dollar made American Cotton less attractive to buyers holding other currencies, dispelling the bullish atmosphere brought by interest rate cuts. According to the monitoring of Zhuochuang Information, the price of American cotton has been fluctuating in the recent period, and the contract settlement price of ICE American cotton in December hovered at 67-72 cents/lb.

It is worth noting that the USDA monthly supply and demand report has lowered the annual export forecast of American cotton, but the weekly sales report of American cotton shows that the export volume of American cotton has continued to increase in recent four weeks, and the main buyers are Baskis and Vietnam. Zhuochuang Information believes that the monthly supply and demand report may improve the export volume in subsequent years because the data statistical cycle has not fully reflected the recent recovery of American cotton exports.

As the largest buyer of American cotton market in the past, China's subsequent cotton market consumption and consumption capacity will play a decisive role in the total export of American cotton. According to the research of Zhuochuang Information, the spot basis difference of American cotton at major domestic ports in November was more than 3000 yuan/ton, and American cotton's price performance advantage was insufficient, which was still the threshold for domestic commercial enterprises to purchase in the short term. Many commercial enterprises expect that the issuance of import tariff quotas in January next year may stimulate the opening of import windows. Therefore, the short-term external price of American cotton is likely to continue to fluctuate.