Production shrinks and demand shrinks

According to the report of China Cotton Storage Information Center, in 2023, the national cotton planted area of 41.402 million mu, a decrease of 4.768 million mu, a decrease of 10.3%; The cultivated cotton area in Xinjiang was 36.163 million mu, a decrease of 3.155 million mu, or 8.0%.

Wang Li, dean of the School of Economics and Management at Shihezi University, said supply and demand are the main reasons affecting cotton price fluctuations. On the supply side, due to the low temperature of cotton sowing in the early spring and the subsequent extreme weather, the impact of grain demand and the withdrawal of the second-best cotton area, coupled with the optimization of the cotton industry layout in Xinjiang and other multiple factors, this year's cotton production has become a foregone conclusion.

In the past, the decline in supply will inevitably lead to a rise in cotton prices, but the recent frequent foreign wars and conflicts, and the Federal Reserve's interest rate hike have seriously affected the demand side, which is the main reason for this round of low cotton prices.

However, some insiders believe that although cotton prices have fallen in the short term, the overall global cotton production has decreased this year, and the later stage will play a certain supporting role for cotton prices.

Cotton is an agricultural product in a long industrial chain, involving many links from cotton planting, processing and circulation, spinning and weaving to textile and clothing, and the decline in cotton prices will have an important impact on each link.

Wang Li said that it is necessary to pay attention to the construction of the toughness of the entire cotton industry chain, play the role of policy guidance, and concentrate resources and policy advantages through agricultural subsidies, technical training and market-oriented policies to ensure the stable production, high quality and strong competitiveness of cotton in the Yishan cotton region.

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