International And Domestic Market Prices Closely Linked

In 2016/2017, the output expectation of China and India was basically the same as that of the previous year. In August, the USDA report showed that the United States increased output by 650 thousand tons in the new year, and Pakistan increased production by 200 thousand tons (Pakistan's domestic cotton production prediction Committee expected to increase 380 thousand tons to 1 million 910 thousand tons), Brazil increased 100 thousand tons, the total output increased 1 million 220 thousand tons to 22 million 320 thousand tons worldwide, the demand increased 300 thousand tons to 24 million 300 thousand tons, and the global gap was 2 million tons.

Considering the supplementary supply of China's reserve cotton, the supply and demand of the global cotton market basically balanced in 2016/2017.

2015/2016,

The export exceeded the plan of about 300 thousand tons, and the excessive export of cotton in India caused its tight domestic supply. At the end of 2015/2016, it was in a low inventory state, and India cotton was on the spot in other countries.

Since the end of March 2016, China's cotton business inventories are at a historic low level, and the market is always in a state of hunger and thirst.

By mid October 2016, the pressure of concentrated supply in the northern hemisphere will show up; in the northern hemisphere market, including India, there will be enough cotton supply before December.

The first stage is from September 2016 to February 2017.

The Chinese market, in September 2016, is the supply gap period between the new and the old cotton. The market is in low inventory and new cotton is not listed, and the price is relatively strong.

Since October, new cotton has been listed in large quantities, and the supply pressure will be on the market now.

At the same time, the United States, Pakistan, India and other countries cotton also listed on the volume, especially the United States.

The huge increase in production will bring huge pressure on spot sales, and the price competition of downstream cotton yarns will also suppress cotton prices.

The price of cotton in China is low by cotton farmers' psychological price and direct subsidy.

And other factors.

The second stage is from March 2017 to August.

In the tight balance of global cotton supply and demand, in the late 2016/2017, global cotton supply resources will be reduced and supply will be scarce.

As the world's second consumer country, India or leading the world's cotton prices, the United States cotton and Cheng cotton will follow the India cotton price rise, the spot cotton price in India will exceed the high point of 92 cents / pound in 2015/2016, ICE cotton or 85 cents / pound.

The domestic cotton and the outer cotton keep reasonable price difference. The price of Zheng cotton will surpass the high point set in July 2016, or up to 18500 yuan / ton.

After the Chinese Lunar New Year in 2017, with the gradual easing of supply pressure in the northern hemisphere, the export of US cotton will accelerate and India's export resources will be exhausted in advance. By the end of 2016/2017, China will fill the gap because of the supply of reserve cotton, while India, Pakistan and other countries will have similar low inventory and high water prices this year, and the US cotton export progress will be better than that of the previous year.

Meanwhile, the Gaosheng water in India and Pakistan will drive the global industrial chain to increase inventories, supply will have a gap, while the supply gap in the Chinese market has a reserve cotton supplement, but because the principle of throwing and storing is not to suppress the market and prevent cotton prices from rising too fast, the deep meaning is to prevent the domestic and foreign cotton prices from affecting the competitiveness of China's textile industry in the whole world. Therefore, the fluctuation rhythm of the domestic and international cotton market in the new year will be closely related.

It is estimated that the supply and demand of the global and domestic cotton market will be basically balanced in 2016/2017. The main factor that affects the price fluctuation is that the supply rhythm pformation will cause the market mood change, thus causing the industrial chain to increase or decrease the stock.