As the rapid spread of Covid-19 across all countries has led to the cancelation of export orders for apparel in China’s factories, cotton demand is expected to decline by 0.6-1 million tonne in 2019-20.
This was recently expressed in China’s cotton futures market. The most actively traded May cotton contract dipped below 10,000 yuan/mt on Zhengzhou Commodity Exchange on March 24, once to the lowest of 9,935 yuan/mt, which was close to the historical low of 9,890 yuan/mt and has declined by 4,515 yuan/mt from 14,450 yuan/mt appeared on January 14 before the Chinese Lunar New Year.
Chinese domestic cotton consumption, influenced by the export orders, is expected to fall by nearly 1 million tons soon. If the state reserves of cotton do not persist, the stock / consumption ratio is estimated at 55 per cent, up 7 per cent from the previous season. With the ongoing pandemic, global cotton consumption may also see a significant reduction.
