Mr. Cheng's report is mainly divided into two parts.
First, Ms. Cheng disccussed China's cotton supply and demand from "production and consumption" and "main influencing factors". First of all, Cotton consumption dropped sharply in 2019/20 with a decline of 11 %, particularly affected by the trade war and the pandemic; cotton consumption may grow significantly in 2020/21. The growth is estimated at about 9.7%, still lower than the previous normal level. Cotton production was at 5.8 million tons in 2019/20 crop year and may decrease by 2.1% on the year to 5.68 million tons in 2020/21 crop year, mainly due to the apparent production cut in inland China. Production in Xinjiang is anticipated to be flat or slightly higher compared with 2019/20 crop year. Second, The quality of new cotton is worrying this year and may improve later with increasing procurement in South Xinjiang, but is expected to be largely worse than last year. Production may not fluctuate much, while the supply structure issue may gradually intensify.
To sum up: China's cotton supply may be relatively loose in 2020/21 crop year, resource structural problems may gradually emerge. The price gap between high and low grades is probably to widen, the overall consumption may gradually recover, but it takes time to return to pre-trade war level.In addition, the development of the pandemic, macro-economy and policies has been disturbing the market all the time, and the fluctuation range of cotton price increases.
Then, Ms. Cheng introduced Global cotton supply demand and outlook from balance sheet, major producers and consumers, changes in main markets, pandemic and apparel retail sales and pandemic and consumption. In conclusion, the global cotton supply and demand situation will gradually improve in 2020/21. If COVID-19 vaccine is successfully rolled out, then there will be a substantial recovery in consumption, but its still needs some time to resume to pre-trade war level, and short-term retaliatory demand may appear.