Cotton Market Observation: If China'S Demand Slows Down, ICE Cotton May Be Revised Down In May.

< p > although American cotton producers predict that their planting area will be greatly reduced this year, the supply of old cotton is still huge, which may suppress the May cotton because China's demand slows down.

In the US Department of agriculture's February supply and demand report, the US 2012/13 inventory ended at the end of 4 million 500 thousand, and the inventory / consumption ratio was 28.3%.

Less than the 4 million 800 thousand pack inventory reported in January, China's strong purchases prompted us exports to increase by 300000 packages.

However, the final inventory was higher than last year's 3 million 350 thousand package, higher than the 2 million 600 thousand package in 2010/11.

World end inventory reached a record high in 2012/13.

Almost all of this year's inventory growth is in China.

< /p >

< p > China's inventory level at the end of 2012/13 is expected to reach 42 million 600 thousand packages, up from 30 million 200 thousand last year.

Remember, China consumes about 35 million 500 thousand bales of cotton per year.

China's inventory / consumption ratio is expected to be 120%, compared with 28.3% in the United States.

Last week's US Department of agriculture Outlook Forum initially predicted that China's demand for imports in was only 8 million packs, down from 14 million packages in 2013/14 and 24 million 530 thousand packages in 2011/12.

< /p >

The total export volume of the US P 2013/14 is expected to be 11 million 300 thousand bales.

In comparison, this year was 12 million 500 thousand bales, which exported 11 million 700 thousand packs last year, and exported 14 million 400 thousand packs two years ago.

2013/14 world end inventory is expected to rise to a record high of 88 million 400 thousand packs, inventories / consumption ratios hit a new high of 81%, compared to 67% this year, 67% last year, and 43% in 2010/11.

< /p >

< p > US dollar has reached the highest level in five months, which may make it more difficult for US exporters to export cotton to the world market.

Last week, the PMI data in Europe were very poor, coupled with the weakness of other industrial commodities, which will indicate that China's textile exports may also slow down.

China's stock market fell 5% last week, while American consumers are facing higher gasoline prices, higher tax burden and unstable employment.

Howard boasts that textile demand in the three main regions will slow down, especially in southern Europe.

< /p >

< p > the recent strong demand for cotton in the United States offset the rising stock exchange and the huge supply of cotton in the world, helping to stabilize the market price of the May contract in the 81.50-84.50 cents range.

Cotton rose to its highest level since May 10, 2012 last May, but the current increase was only partially cut to 85.55 cents.

Due to the failure to completely fill this gap, technical graphics may develop in the negative direction.

< /p >

< p > cotton market overbought seems to have lost momentum.

Since January 24th, the market has seen three innovations and the relative strength reading is lower than 88.7 in January 24th.

In addition, in February 12th, the net speculators totaled 98190 contracts, and the market would be prone to more multiple storehouses if they fell out of the support position.

< /p >

In P February 20th, the stock of ICE exchange climbed to 307381 packs, up from 299484 packets of the previous trading day, 173564 packs the previous week, and 127160 packs of the first three weeks.

These increased inventories entered the March contract delivery period, and some traders regarded them as bad.

In fact, there are 1040 delivery contracts on the first notice day.

A large volume of deliveries, strong US dollar and economic uncertainty may lead to a downward revision of the cotton market.

< /p >