Global Cotton Production will Be Substantial Surplus by 6.9% Increasing Rate

News from US media said, due to high prices of cotton lead to cotton farmers to expand the acreage, and China from the strategic reserves will be placed in the excess inventory to the market, the cotton supply will be substantial surplus.

According to the US Department of Agriculture estimates that in the August 1 this year, the beginning of the cotton season, global production will rise 6.9%, in addition to China's global inventory will record a record high. The United States is the world's largest cotton exporter, the US cotton farmers are expected to be the largest harvest in 10 years, Australia and India's cotton harvest will also increase.

Last year, cotton futures prices rose 12%, leading to farmers to expand the cotton acreage. At the same time, there is no sign that China has slowed down the pace of placing excess inventory from the strategic reserves into the market. The abundant supply outlook makes cotton prices the biggest monthly decline since last August.

"The supply side will remain abundant and cotton prices will fall further if production increases," said Lara Magnuson, a portfolio manager at Altegris Consulting in the US. "The recent decline in China's debt rating led to There is concern that global demand "will not be enough" to absorb excess production.

According to the US Commodity Futures Trading Commission on the 26th published data, in the week ended May 23, investors will be their net long positions in cotton by 8.7%.

New York's Intercontinental Futures Exchange US Futures Branch May cotton futures prices fell 7.7 percent, 26 days to close at 72.79 cents per pound. This is the first time since December last year, cotton prices fell monthly.

Good weather has propelled the United States’ cotton industry, especially its largest growing area, in the spring of Texas. Until May 21 this year, US farmers have completed 52% of the acreage, higher than the level of 45% over the same period last year.