[Depth] Cotton Price Rise And Fall!

The trend of cotton market this year is beyond the expectation of many people. The high opening and low walking mode of Xinjiang seed cotton purchase seems to have fallen off before it starts. The trend of Zheng cotton is also continuing to oscillate at low level. Although the industry believes that the contradiction between domestic cotton supply and demand is still there, the reality of the blow is that more and more people are no longer optimistic about cotton, and the consumer market which has a crucial impact on cotton prices is also slightly bleak under the background of Sino US trade friction.

I can not help asking what is wrong with cotton prices?

Domestic cotton output steadily increased

In the early days, the author went deep into Xinjiang to investigate cotton production situation. From the data we visited at that time, we could see that the output of cotton would increase. Even though the cotton weather in Xinjiang was hit by bad weather in May, there was a certain loss of cotton seedlings. But with the improvement of weather in the late period, cotton growth was compensated to a certain extent.

Moreover, the increase in the number of areas in the northern part of the territory exceeds the market expectation. Even if the yield per unit area has decreased, the total output will increase.

Overall, output is stable.

However, judging from the recent harvest, some cotton growers and cotton ginning companies reacted, and this year's output is lower than last year.

A cotton grower in Wensu County of Akesu has feedback that cotton production should be increased at least from last year, but at least it should be flat last year. However, the yield has not been satisfactory recently, and its output has reached only 350 kg / mu, lower than last year's 380 kg / mu.

Although the number of cotton bolls per plant is higher than that of last year, the overall reduction is due to the fact that the average number of trees per mu is not higher than that of last year. It may still have a lot to do with the weather in the early days.

Of course, this is just one point, not enough to represent the face.

Country

The monitoring system September survey data can explain the problem from the overall situation. The survey shows that as of the end of August, the weather of the main cotton producing areas in the whole country is in favor of bolting and bolting of cotton. It is estimated that the new cotton output per unit area will be 128.2 kg / Mu in 2018, up 4.2% from the same period last year, with a total output of 6 million 283 thousand tons, up 2.5% over the same period last year.

Among them, the average yield per unit area in Xinjiang increased by 9.2% compared with June, an increase of 2.2% over the same period, and the output is expected to be 5 million 240 thousand tons, up 4.5% over the same period last year.

From the above data, it is concluded that although some cotton production decreases slightly, it will not affect the overall situation.

In the case of basically stable supply, downstream purchasing and consumption will have a crucial impact on cotton prices.

Lack of funds, cotton enterprises did not rush to buy

In the case of stable output, there was no phenomenon of raising prices and rush to collect in the early stage of seed cotton purchase in Xinjiang, which is quite different from previous years.

As early as 5 and June this year, the market has expected that this year's seed cotton purchase will still not escape the vicious circle of raising prices and snatch the harvest. The actual situation is that the sale volume is far higher than the purchase volume.

The contradiction between selling and selling in Northern Xinjiang is more prominent than that in southern Xinjiang.

Because North Xinjiang is basically machine picked cotton, picking time is very concentrated, resulting in oversupply.

According to the relevant personage, this year, there are few cotton ginning enterprises that use agricultural development loan. They basically have their own funds or cooperate with traders to obtain funds for acquisitions, resulting in the acquisition can not meet the needs of sale.

Of course, there are also Southern Jiangsu ginning enterprises. This year, the number of enterprises going to the southern Xinjiang Package Factory decreased year by year.

According to China's cotton net data, the price of machine picked cotton has dropped to below 6 yuan / kg, and the price of hand picked cotton has also dropped to 7.0-7.2 yuan / kg.

It is understood that in the northern Xinjiang, a large number of machine picked cotton in the market, there are long queues at the gate of the ginning factory, and some fields can not be found temporarily, even if they are found to be pported.

In face of the demand for supply, the ginning mills will naturally lower the purchase price.

The southern Xinjiang is mainly hand picked cotton, and it does not appear to be concentrated in a large number of cases like the northern Xinjiang, so cotton prices are relatively stable.

When the spot weakness fell, Zheng cotton and the fall were natural.

Downstream procurement has not yet started

After the new cotton came into the market, the mainland traders and textile enterprises went to the Yangtze River to purchase continuously. But this year, procurement has not been started yet.

Especially in the downward trend of cotton prices, textile companies seem to be more patient.

A textile manufacturer said that now the raw material inventory is sufficient, and is not eager to purchase.

The inventory turnover period of their enterprises is 3 months. Small and medium-sized enterprises usually have 1 months or so, and some funds are difficult to basically purchase on demand.

Other textile enterprises have adopted the strategy of "cotton price rising and wait-and-see, cotton prices down and replenishment".

Nanjiang ginning factory also said that lint is very hard to sell, mainly textile enterprises purchase less, and traders are watching.

Although the price for the cooperative old customers is also reported, it is because the price is high and no news is heard.

At present, the average price of seed cotton in the factory is 7.3 yuan / kg (42% lint), which is equivalent to 16200 yuan / ton of lint cost, plus 1-2 months' financial cost, the price is 16500 yuan / ton, now it is difficult to sell 16000 yuan / ton.

According to the national cotton market monitoring system data, in the early October, the average stock usage days of the enterprises surveyed were about 39.7 days (including the quantity of cotton imported to Hong Kong), and the annulus ratio increased by 3.6 days.

Projections of the national cotton industry inventory of about 922 thousand tons, an increase of 10%, an increase of 3.4% over the same period last year.

The cotton industry stock situation is different in the main provinces of the country. The cotton industry inventory in Guangdong, Hebei and Jiangsu provinces is relatively large.

It can be seen that under sufficient inventory conditions, textile enterprises are not eager to purchase.

Domestic supply shortage still exists.

Although cotton prices continue to decline, it does not affect speculators to see much of it because of insufficient supply of domestic cotton.

The industry believes that China will need to import cotton in the future, which will drive up the price of cotton.

From the table, we can see that despite the slight increase in the output of Xinjiang cotton this year, it is still in short supply and the gap is close to 2 million tons.

Even according to market rumors, the state issued 800 thousand tons of quasi tax quotas to textile enterprises, and another 400 thousand tons of quotas were allocated to the state trading enterprises (not yet verified), that is to say, the total quota issued in 2018 was about 1 million 200 thousand tons.

Of course, the state reserve cotton has a certain stock, and it may continue to play a regulatory role.

But professional speculators believe that the cotton price will not get rid of the fate of the future as the reserves of cotton decrease.

Globally, the US Department of agriculture (USDA) projected a global production demand gap of 1 million 328 thousand tons in October, ending the annual demand of 2017/18 for more than expected. The global inventory consumption ratio dropped to 58.3%, the lowest level since 2011, 7.3 percentage points lower than the previous year.

According to the October report of the International Cotton Advisory Committee (ICAC) and the forecast of the national cotton monitoring system, China's imports are expected to reach about 2 million tons.

The impact of Sino US trade friction should not be underestimated.

Since the Sino US trade friction, there has been a great change in the domestic cotton market. Up to now, the United States has imposed tariffs on imports of Chinese goods for 250 billion US dollars. The list includes knitted fabrics and knitted fabrics, and yet not yet knitted or crocheted garments and accessories, non knitted or crocheted garments and accessories.

This means that the tax increase list has been gradually involved in textiles. If the future trade war continues, the whole category of textiles may be spared.

With such pessimism, textile enterprises have encountered great problems, but the biggest problem is people's loss of confidence in the market.

According to customs data, in 2017 1-12, the total export volume of textiles and clothing in China was 266 billion 950 million US dollars, up 1.72% over the same period last year, of which the total export volume of textiles was 109 billion 772 million US dollars, up 4.46% over the same period last year. The total export volume of garments was 157 billion 178 million US dollars, down 0.42% compared to the same period last year, and China exported to the US in 2017.

About 58 billion 400 million US dollars, that is to say, China's exports of textiles and clothing to the United States account for 21.9% of total exports.

In this proportion, even if we impose tariffs on all textiles in China, the impact will be limited.

Although the amount is limited, it has a great impact on people's future psychological expectations, and the direct result is the impact of foreign trade orders.

It is a vivid portrayal that downstream enterprises dare not take orders or decline.

At present, woven enterprises have not been affected, production is still in order, but for knitting enterprises will be very different, downstream orders are significantly lower than expected.

In the first half of the year, during the textile off-season, due to the decline of imported yarn advantage, the textile enterprises maintained strong productivity by cost advantage and did not reduce production in the off-season.

With the end of the rotation, the "golden nine silver ten" peak season did not appear on schedule, mainly due to poor enterprise orders, and product inventories are increasing.

Henan textile enterprises said the first half of the year

The inventory turnover period is basically around a week. Now it has been accumulated for one month, and the order is still not improving.

Although the current cotton price has declined and the production cost has been reduced, the price of the downstream weaving enterprises has been lower, and the price trend has been strengthened, and the inventory volume has obviously decreased.

Besides, there are other factors, such as finance, policy, capital and so on.

It is hard to predict how cotton prices will go in the future, but one thing is certain that cotton prices will continue to rise and fall.

The Tao Te Ching said, "the good builders do not pull out, the good ones do not go away, the children do not sacrifice."

As long as we follow the spirit of the road, we can survive.