Cotton Business Inventories Decrease, Industrial Stocks Will Not Decrease But Increase.

Entering August, under the support of purchasing and storage expectations, zhengmian 1301 contract broke through 19000 yuan / ton, 19300 yuan / ton pressure level, and stood on the average. Last weekend America Agriculture According to the Ministry's report, the external market has dropped sharply, while Zheng cotton's performance has been relatively low because of its support for the purchase and storage. It has been running horizontally in the densely packed area and is in an awkward situation.

The decline in yield is a foregone conclusion.

Since this year, extreme weather has occurred. The weather conditions of cotton producing areas in China from 4 to July are slightly worse than last year. The temperature condition in the the Yellow River river basin is normal, and its illumination is slightly better than that of last year. However, since July, heavy rainfall has been frequently encountered since July, and precipitation has exceeded 30% in the same period last year. The Yangtze River Basin has been affected by high temperature and rain since July, and the weather conditions are slightly deviated.

On the whole, the overall weather conditions of all cotton producing areas are not as good as last year, but cotton has strong self repairing ability. The final output and quality depend on the weather conditions in 8 and September, and the drop in yield per unit area is almost final.

　 domestic cotton Industrial inventories do not decrease but increase.

China Cotton Information Network released 13 cotton business survey in July, and conducted a sub provincial survey of cotton processing enterprises, warehousing and logistics enterprises and circulation traders. As at the end of July, the national cotton business inventory was 1 million 470 thousand tons (including cotton and cotton in circulation, excluding national cotton reserves), of which Xinjiang's commercial stocks (200 thousand yuan) and 1 million 270 thousand tons of commercial stocks in the mainland. At the end of June, the national cotton business inventory was 1 million 730 thousand tons. That is, the consumption of 260 thousand tons per month in July is lower than the average monthly inventory consumption, which reflects the current weak demand for cotton market.

While business inventories are decreasing slowly, industrial inventories are not decreasing. Because of the annual turnover of new and old cotton, textile enterprises are puzzled by the market outlook and choose to increase their stocks cautiously. By the beginning of August, the stock of cotton in textile enterprises was 743 thousand and 300 tons, an increase of 17 thousand and 700 tons from last month.

Domestic textile enterprises are struggling to survive in the cracks between high cotton prices and low demand. In order to protect the interests of cotton farmers, the state has drawn up a policy of purchasing and storing, which has made the spinning enterprises suffer from the high price cotton which is 3000 yuan to 4000 yuan per ton higher than the outer cotton. At the same time, it also suffers from the downturn of demand caused by the global economic slowdown. The number of textile enterprises in China has dropped to twenty thousand this year, the lowest since 2006. Textile enterprises face severe structural adjustment and industry shuffling, which in turn restricts the demand for raw cotton.

Because of International market With the increase of uncertainties, domestic textile and garment exports are facing a more complicated situation. The weak growth of the world economy, the sovereign debt crisis, the pressure of RMB appreciation, and the rising cost of labor and raw materials will have an impact on China's textile and apparel products. The clothing output in recent years has obviously shrunk, though it has been better than in May, but it is still not as good as last year's output level. Garment exports in July were 8% lower than the same period last year.

The policy is expected to support Zheng cotton.

A lot of bad factors work together in the cotton market, but the domestic cotton market performance is relatively down, the most fundamental reason is the policy of purchasing and storage to be launched in September.

For the policy of dumping and storage, the author believes that with the approaching of the date of storage and withdrawal, the effect of dumping and storage on the market will be smaller and smaller. It is likely to develop into a situation of collecting and throwing aside one side. It can not only shed part of the storage capacity for new cotton, but also meet the demand of low cost cotton for textile enterprises. During the period of purchasing and storage, the impact of dumping and storage on the Zheng cotton market is relatively limited.

To sum up, the purchase and storage is expected to offset many bad factors to suppress the cotton market. With the closing date of storage, the cotton price will be close to 20000 yuan / ton. But in the long run, the serious weakness of the fundamentals is the fact that the whole market can not escape. Once the support function of purchasing and storing is lost, the collective release of the negative factors will bring cotton prices into the abyss.