One Word: The Fundamentals Change &Nbsp; Zheng Cotton Is Hard To "Bull" Again.

The US Department of agriculture's report on cotton supply and demand was released in January 12th.

The USDA report is neutral and less than expected.

The market expected that the cotton report in January would reduce the output of cotton in China and Australia, and the tension of global cotton supply and demand could be aggravated again.

However, the 12 night report showed that China's supply and demand data remained unchanged. It is estimated that China's output will be 6 million 532 thousand tons, 10 million 233 thousand tons of consumption, 3 million 266 thousand tons of imports and 2 million 879 thousand tons of final inventory, which is exactly the same as the data released in December.

The market expects Australian cotton production to be drastically reduced due to flooding.

However, this report did not reduce Australian cotton production, but still maintained the estimated output of 871 thousand tons in December.

Cotton production in India and the US has not changed much.

According to the latest supply and demand report of the US Department of agriculture, the global end of cotton inventory in 2010/2011 has been reduced, indicating that the relative tension between supply and demand of global cotton continues, but this is also expected by investors.

In fact, these factors have been fully reflected in the 2010 cotton mad bull market.

Looking forward to 2011/2012, all kinds of bad factors at home and abroad will have an important impact on cotton prices.

The end of the global inventory will bottom up, supporting cotton prices rose sharply no longer.

Mitigation of cotton supply and demand in the new year

Under the assumption that there is no major disaster weather around the world, the author expects that in 2011/2012, global cotton supply and demand will change from tension to basic balance.

In the context of a sharp rise in cotton prices, in 2011, the global cotton planting area reduced to increase is a big probability event.

Under normal weather conditions, global production is expected to increase. The estimated data is roughly 26 million 493 thousand tons, which is 1 million 355 thousand tons more than that of 2010/2011 in 25 million 138 thousand.

In terms of consumption, global consumption is expected to grow steadily in the next year, but the growth rate may be reduced to 26 million 45 thousand tons.

In this way, when the annual global output is expected to exceed 448 thousand tons of global consumption, the global cotton market will gradually shift from the shortage of production to the basic balance of production and demand.

From the beginning of 2009/2010, the end of global cotton inventories decreased rapidly, from 13 million 217 thousand tons at the highest level to 9 million 326 thousand tons in 2010/2011, which is also the main reason for the success of the current cotton bull market.

It is estimated that in the year of 2011/2012, the end of global cotton inventory will rise or increase to 9 million 636 thousand tons.

From the beginning of last year, the global cotton consumption ratio continued to decrease, and the inventory consumption ratio in 2008/2009 was 55%, and then dropped to 36.84% in 2009/2010 and 36.7% in 2010/2011.

It is estimated that by the end of next year, the cotton end inventory consumption will slowly rise to 37%, although this figure is still at a relatively low level, but it is a major change from decreasing to increasing.

Therefore, textile related enterprises and institutional investors need to adjust their medium and long-term operation strategies in accordance with the possible changes in the global cotton supply and demand fundamentals and their own situations, and prudently operate to avoid price risks.