Cotton Inventories Grew By 7% In The Past Half Year, And Cotton Prices Continued To Bear Pressure.

The US Department of agriculture forecast supply and demand in November, because global consumption growth slowed down and initial inventory increased, 2019/20 global end inventory was higher than the forecast for May this year.

In 2019/20, the end of the world cotton inventory is expected to be 80 million 800 thousand packages, mainly due to the consumption reduction in 2018/19 and 2019/20, which is rooted in the fact that global GDP growth and cotton demand growth are lower than expected.

Economic growth is the main driving force for cotton consumption growth. Cotton demand is expected to decline as cotton growth is expected to decline. The International Monetary Fund (IMF) has lowered the global GDP for 2018-2020 years. Compared with May, GDP in 2019 dropped by nearly 1 percentage points, the largest reduction. China's consumption in 2018/19 and 2019/20 has declined since May. One of the reasons is that Sino US trade war has slowed domestic economic growth.

Compared with May, the largest increase in final inventory is India, which has increased by more than 80% over the May forecast, and production forecasts for 2018/19 and 2019/20 have increased, while consumption has decreased. The reason is that economic growth is sluggish and MSP prices have led to a decline in cotton yarn exports. The MSP system in India has kept the cost of cotton production in the downstream textile industry at a high level, thus threatening the export of textiles.

Since May, the increase in inventories and consumption in Bangladesh has indicated a slowdown in textile and clothing exports in the country. The decline in exports of cloth and clothing in the country is due to slower growth in major consumer markets, such as the European Union and the United States.

Although the global cotton production in the 11 monthly report is lower than that predicted in May, it still increased by about 3000000 packs compared with the same period last year, making the global cotton supply continue to increase. The increase in global supply and the reduction in scavenging make the final inventory increase by 7% compared to May, putting pressure on cotton prices.

Extended reading

India's cotton output increased by 13.6% in CAI:2019/20 India

In November 8th, the India Cotton Association (CAI) released its first forecast for 2019/20. According to the forecast, cotton production in India is initially estimated at 6 million 26 thousand and 500 tons, up 722 thousand and 500 tons over the same period, an increase of 13.6%.

CAI said that in 2019, the cotton planting area in India was enlarged, and the seasonal wind and rain was sufficient. The yield per unit area was higher than that of the previous year. However, the recent excessive rainfall caused floods in some areas, so the output of cotton increased by 13.6%.

In 2019/20, the total supply of cotton in India was 6 million 851 thousand tons. At the beginning of the year, the total inventory was 399 thousand and 500 tons, the output was 6 million 26 thousand and 500 tons, and the import volume was 425 thousand tons, a decrease of 22% over the same period last year. Domestic consumption was 5 million 355 thousand tons, an increase of 1.1% over the same period, and 714 thousand tons of exports, unchanged from the same period last year, and 1 million tons at the end of the year.

In October, the new cotton market in India was 228 thousand tons.