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Australian cotton exports to China may bottom and rebound in 2020

According to customs statistics, in 2020, American cotton accounted for 45% of China's total cotton imports, followed by Brazilian cotton and Indian cotton, accounting for 29% and 12% respectively; while in 2019, the proportion of Brazilian cotton and Australian cotton, the top two in terms of forward export volume, fell sharply, especially the medium and high-quality Australian cotton, which was far away from China's market, was not concerned or even ignored by textile enterprises and traders.

From the feedback of several international cotton merchants and Australian cotton export enterprises, from January to February 2021, the inquiry and transaction of shipping, bonded and customs clearance of Australian cotton are still relatively cold, which is in sharp contrast to the phased activity of Indian and Brazilian cotton.

There are three reasons for the industry analysis: first, it is difficult to repair the Sino Australian relations due to the continuous destruction of Australia; second, in 2020, Australia's cotton output is only about 600000 bales, and the proportion of high-quality and high index cotton is lower than that in previous years due to weather, cotton varieties and other reasons; third, the price of Australian cotton in 2020 is significantly higher than that of American cotton, Brazilian cotton and other competitors (the base difference of Australian cotton once reached 22-23 cents / pound, but now it has dropped to 13-15 cents / pound) Cents per pound).

Nevertheless, the author believes that Australian cotton exports to China are expected to stabilize and rebound in 2021, and the proportion of Australian cotton exports to China's total cotton imports is expected to rebound. The reasons are as follows:

First, with Biden in the White House, the confrontation between China and the United States in trade, politics, military and other fields is expected to ease, and Sino Australian relations are expected to break the ice with the recovery of Sino US relations; second, the total cotton output of Australia in 2020 / 21 is expected to reach about 2.6 million bales (up nearly 2 million bales compared with the previous year), and the grade and quality are relatively ideal, so the demand for purchasing low index cotton with yarn mills in Vietnam, Bangladesh and other countries is low Third, with the rapid recovery of global economy, trade and transportation, Chinese textile enterprises' demand for high-quality and high-grade cotton continues to rise. On the one hand, the price of long staple cotton in China is not only high, but also the supply is tight; although the strength of Australian cotton is weak, 1-3 / 16 and above indicators can still partially replace long staple cotton with cotton spinning high count yarn; on the other hand, the US government's import ban on cotton products in Xinjiang has not been lifted; moreover, by 2020 / 21, the US cotton is gradually oversold, and the cotton planting area and output in Brazil are forecast to be sluggish Fourth, the price gap between Australian cotton and American cotton and Brazilian cotton is narrowing.

According to the survey, the net weight "buy it now" of M 1-1 / 8 and M 1-3 / 16 of Macao cotton in Qingdao, Zhangjiagang and other ports are 17500-17700 yuan / ton and 18000-18100 yuan / ton respectively; while the net weight basis of the same quality and grade American cotton 31-437 is 17350-17450 yuan / ton; the net weight basis of M 1-1 / 8 Brazilian cotton is 16600-16700 yuan / ton, and the price difference continues to narrow compared with the previous months.