Cotton Prices Continue To Fall, The Follow-Up Market Has Attracted Much Attention.

The 1609 month contract of Zheng cotton futures closed at a low price on Friday, closing down 80 yuan, closing at 10080 yuan, closing about 202 thousand hands and holding about 519 thousand hands.

On the spot, China's cotton price index 3128B cotton index fell 12119 points last Friday, down 71 points.

Continue to go down, continue to be suppressed by throwing and storing information, market participants are not optimistic about the future, buyers have lowered the intention to purchase prices, spot inquiries increased, and the paction was limited, the downstream businesses were cautious watching, waiting for the news came out, cotton supply pressure is greater, cotton prices will continue to be suppressed.

Futures continued to decline, weak down, maintaining a downward trend, the trend is expected to go down again.

ICE cotton futures fell on Friday, the most active May contract fell 0.23 cents, closing at 57.26 cents cents, on the one hand is affected by the external situation, the dollar strengthened, crude oil, CBOT cereals and other commodity prices were more weak, forcing cotton prices under pressure; two cotton demand situation is not good, announced last week.

Weekly sales volume dropped sharply. As of February 25th, ICE could deliver 2 cotton contract stock of 66104 packages, compared with the previous day's 62654 package. Inventory increases showed a weak consumer side. Overall, last week recorded the largest weekly decline in nearly five months, and the price dropped to nearly six and a half years.

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In February, the international cotton advisory board (ICAC) predicted that in February, global cotton production and consumption were 22 million 461 thousand tons and 24 million 84 thousand tons respectively, representing a decrease of 14% and 0.9% compared with the same period last year.

Although production has dropped faster than consumption, the phenomenon of output larger than consumption has changed, but huge inventories are still firmly pressing cotton prices.

In addition, China's massive inventory of cotton reserves is expected to suppress cotton prices for a long time.

The market anticipate that the policy of reserve cotton outgoing may start in April, and the price of reserve and output will have a decisive impact on the cotton price trend in the later stage.

At present, the market generally believes that it is imperative for national cotton stocks to go out of stock. In order to ensure the effective arrival of stock reduction, the departments concerned may adopt a more market-oriented dumping and storage pricing mode, which is likely to cause further decline in cotton prices.

Therefore, we believe that before the implementation of the treasury policy, Zheng cotton will continue to operate in a weak way.

The global economic outlook is more pessimistic. In the recent economic outlook report, the OECD predicted that the global economic growth rate will be 3% and 3.3% in the next two years, down 0.3 percentage points from the expectations made by the organization in November last year.

The global economic recovery will remain very slow. The US economy will grow by 2% and 2.2% respectively in the next two years, 0.5 and 0.2 percentage points lower than previously expected, and the euro area's economic growth rate is 1.4% and 1.7% in the next two years, 0.4 and 0.2 percentage points lower than previously expected.

Pessimistic expectations of economic recovery continue to erode investor confidence.

According to the statistics of the China National Business Information Center, during the golden week of Spring Festival (from New Year's Eve to early sixth, February 7th to February 13th), the retail sales of 100 major large-scale retail enterprises decreased by 6.6% compared with the same period last year, and the growth rate dropped to the same level in 2009 after the financial crisis, which was 4.8 percentage points higher than that in the 2015 golden week of 2015.

Retail sales data dragged down cotton prices, although cotton production has continued to shrink, but in the face of huge inventory, the decline in output has limited impact on supply and demand rebalancing, and demand side warming can really support cotton prices.