Market Analysis: American Cotton Market, An Industrial Cluster, Continues To Pay Attention To The Weekly Export Sales

The US Department of Agriculture (USDA) raised its estimate of US cotton production in 2024/25 by 70000 bales to 14.26 million bales; The export volume of American cotton is estimated to remain at 11.3 million bales.

The increase in output led to an upward revision of the final inventory estimate of American cotton to 4.4 million bales in 2024/25, and 4.3 million bales in November. This led to an increase in the inventory/use ratio from 32.8% to 33.6%, resulting in a looser overall supply and demand balance in the United States.

There have been some obvious changes in the global aspect of the supply and demand balance sheet, but the overall sentiment on supply and demand remains unchanged. 　

According to the December supply and demand report released by the US Department of Agriculture on Tuesday, the global cotton output in 2024/25 is estimated to be 117.39 million bales, compared with 116.18 million bales in November. The global cotton ending inventory in 2024/25 is estimated to be 76.02 million bales, and 75.75 million bales in November.

The most significant change comes from India, where the domestic volume is estimated to increase by 1 million packages and the consumption is expected to increase by 500000 packages.

Although the overall yield of American cotton has increased, the yield in the southwest is low. It is estimated that the cotton output in Texas will decrease by 300000 bales to 3.9 million bales, that in Oklahoma will decrease by 10000 bales to 290000 bales, and that in Kansas will remain unchanged at 190000 bales. In addition, Texas Pima cotton production prospects increased by 11000 bales, bringing the total output to 51000 bales.

The stock market was mixed this week, and the Dow Jones Industrial Average fell slightly

Due to the soaring cost of food, American producer prices rose more than expected in November, but the slowdown in service prices brought hope for the trend of slowing inflation to continue.

The November consumer price inflation data released on Wednesday was in line with economists' expectations, which raised the bet on another interest rate cut next week.

In November, the US consumer price index (CPI) was in line with expectations, rising 0.3% month on month and 2.7% year on year. November US producer price index (PP (7664, - 18.00, -0.23%) I) slightly higher than expected, up 0.4% month on month and 3.0% year on year.

Although the inflation data is stronger, the market has digested the expectation that the Federal Reserve will cut interest rates by another 25 basis points at its meeting on December 17-18. Inflation has not declined as expected, and the labor market is still relatively strong. Therefore, the prospect and timing of interest rate reduction in 2025 are still uncertain.

The US dollar remained strong, boosted by global interest rate cuts (including the third consecutive cut by the European Central Bank). This also depressed commodity prices, as the strengthening of the US dollar made the prices of US goods imported by other countries higher.

US export sales continue the previous trend, indicating stable sales

The export sales report released by the US Department of Agriculture (USDA) on Thursday showed that in the week ended December 5, the net export sales of US cotton in the current year increased by 153000 bales, 10% less than the previous week, and 37% less than the average of the previous four weeks, of which the net export sales to China decreased by 4200 tons. In the next year, the net export sales of American cotton increased by 3300 bales. The export shipment of American cotton was 137400 bales, 13% less than the previous week, and 0% more than the average of the previous four weeks, of which 27800 bales were exported to China.

　　 Outlook for the next week

Next week, the market will welcome a lot of data, including US retail sales, gross domestic product (GDP) and personal income.

Despite the bleak outlook, the cotton market will continue to pay attention to the weekly export sales report.

Finally, the Federal Open Market Committee (FOMC) of the Federal Reserve will hold a monetary policy meeting on December 17-18 and announce the interest rate decision.