Clothing spending falls, cotton price outlook uncertain

New data shows that despite the impact of the new crown epidemic on the global economy, cotton prices were partially revised up in April, but the outlook for cotton prices is uncertain due to falling apparel spending.

According to the latest market data from the U.S. Cotton Company and the U.S. Department of Agriculture, most cotton benchmark prices have been flat or higher in the past month, with the A index climbing from 63 cents per pound. to 65 cents per pound.

Indian cotton prices fell slightly, from 62 cents per pound to 60 cents per pound. China’s cotton index (CC index 3128B) was relatively stable, close to 60 cents per pound. 73 cents. Supporting the market during the pandemic may come from strong U.S. export sales to China. These are all due to the fact that China’s cotton storage system requires external purchases of cotton and is part of China’s implementation of the first-phase agreement.

The outlook for 2020/21 is unclear, but the report adds that it has caused “significant financial losses to ready-to-wear retailers”.

The report pointed out: Both the United States and the European Union also released estimates of consumer spending by category in March. In every region, apparel has been hit harder than other categories (some service categories, such as travel, have been worse).

In the United States, consumer spending on clothing fell 28% year-on-year. In EU countries, consumer spending on garments fell by 42% year-on-year. In both cases, it was the largest decline on record, with April data expected to show an even steeper decline.

Part of the pullback is due to a lack of supply and brick-and-mortar store closures, which have slowed demand as consumers postpone purchases until employment and income prospects improve.

The report added: Once the recovery starts, it is still unknown how strong consumer demand will be. Since China is where the epidemic broke out and was also the first country to start recovery, it may provide some information as a guide.

However, China’s retail sales in March and April were not satisfactory, with overall expenditure falling by 20% year-on-year every month. This is in sharp contrast to the 10% year-on-year growth before the outbreak. It is suggested that after everyone was shocked by the speed and depth of the development of the new crown epidemic crisis, consumers everywhere became more conservative in consumption expenditures.

The USDA’s May production estimate for the upcoming crop year will be slightly below 2019/20 levels (down 3% or 370 million bales, down from 122.7 million bales in 2019/20 to 118.9 million bales in 2020/21).

Analysed at the national level, it is estimated that the maximum year-on-year change rate of cotton production is mostly negative. It is estimated that India will reduce 2 million bales to 28.5 million bales, Brazil will decrease 1.2 million bales to 12 million bales, China will decrease 800,000 bales to 26.5 million bales, the United States will decrease 400,000 bales to 19.5 million bales, and Mexico will decrease 300,000 bales to 1.2 million. Bag. Assuming weather conditions improve, Australia is expected to have the largest year-on-year growth, increasing by 1.1 million bales to 1.7 million bales.

However, global cotton inventories are expected to remain at high levels. Warehousing supply is expected to reach 97.2 million bales by the end of 2019/20. This would be the highest inventory turnover level since 2014/15, when global inventories reached a record level of 106.7 million bales. During this period, China is gradually reducing its inventory, leaving a large amount of global inventory that cannot be freely supplied to the market.

Under current market conditions, too high a proportion of global inventory is available for shipment. Ending stocks are expected to increase again to 99.4 million bales in 2020/21. Cotton supply is expected to have a serious impact on cotton prices throughout the 2020/21 season.

Cotton trading volume is expected to expand in the next crop year (an increase of 8.9% or an increase of 3.5 million bales, from 39.3 million bales to 42.8 million bales). In terms of imports, the largest change rates include China (increased from 2 million bales to 9.5 million bales), Vietnam (increased from 500,000 bales to 7 million bales), and Bangladesh (increased from 400,000 bales to 7 million bales).

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