Reserve Cotton Goes To Stock Work To Complete. Where Does Cotton Price Go In 2019?

In 2019, the cotton market came from the trough. In December 25th last year, the main contract CF1905 of zhengmian futures was 14650 yuan / ton in the year, and the whole cotton industry market also entered the cold winter.

Reserve cotton goes to stock work to complete. Where does cotton price go in 2019?

In fact, the trend of cotton prices in 2018 as a roller coaster is a test of the hearts of the Cotton Traders: in the beginning of May, the broad pattern of the lateral oscillation of the cotton market was strong, and the cotton prices stabilized after the adjustment of the quasi tax quota policy; the national cotton storage wheel extended to the end of September, and the new and old cotton seamlessly linked up; Sino US trade friction and ups and downs.

In the new year's time node, the global economy has been greatly oscillating, Sino US trade relations are delicate and sensitive, and the development of the cotton market has attracted more attention.

In the case of cotton production, policy optimization and market price mechanism more mature, where will China's cotton prices go in 2019?

In the backdrop of the era of post dumping, will the cotton market continue to slump or is there a turning point?

One of the core factors affecting cotton prices is policy.

Will the country continue to produce cotton reserves in 2019?

This is one of the focuses of the market.

After the end of 2018, the stock of reserve cotton decreased from about 11 million 140 thousand tons to about 2 million 700 thousand tons, and cotton inventory was basically completed.

For the future policy trend, the industry believes that the policy information released by the NDRC in the first two years of the new year is in November, but the details of the reserve cotton policy in 2019 have not yet been promulgated, which has increased the uncertainty of the policy.

With the decline in the number of reserve cotton in the national reservoir, the new cotton reserve policy in 2019 may be variable.

According to industry analysis, after three years of dumping, the scale of reserve cotton has been relatively low at present, and there is no pressure to stock up.

Moreover, as a national strategic reserve material, cotton needs to maintain a certain scale to ensure emergency supply, so the possibility of further large-scale auctions is unlikely.

In addition, the industry believes that there is a round of rotation. In November 2018, it was the time when the new cotton market was picked up and the market price had dropped to a low point for two years. However, the China cotton reserve management company did not make a takeover attempt to guarantee the price by the bottom, so the probability of 2019 rounds would be very small.

However, if there is a shortage of supply in the market, leading to a sharp rise in domestic cotton prices, perhaps 500 thousand tons of cotton reserves will be delivered in 2019 to meet market demand.

When the end of the cotton storage cycle ends, the domestic cotton reservoir will not be able to play its role. How can the country ensure the domestic cotton enterprises' demand for cotton?

In this regard, experts said that by adjusting the cotton import policy, expanding import channels to ensure domestic demand for cotton is the most likely.

In December 24, 2018, the State Council Tariff Commission issued a notice that the cotton slip tax should be reduced appropriately.

By adjusting the tax rate roughly, the cost of imported cotton is 200 yuan / ton ~300 yuan / ton.

China's cotton imports are expected to be around 1 million 500 thousand tons in 2018/2019, of which 894 thousand tons are 1% tariff quotas, and the import quota is only about 600 thousand tons.

This will only reduce the import cost of trade enterprises appropriately, although it has little effect on domestic cotton prices. However, it shows that China's attitude towards cotton use is guaranteed by adjusting the cotton import policy.

In 2019, there was a lot of speculation that cotton reserves were in or out of the market.

But it is undeniable that China's cotton production and demand gap is still an objective existence.

According to the insiders, China's largest cotton gap should be at the end of 2019 or early 2020. In the past few years, the relatively narrow cotton import channel will be widened, and the Chinese cotton industry will form a new interaction with cotton.

In 2019, the import of cotton will become the main force to make up for the gap between supply and demand in China's cotton market, and the proportion will increase in total domestic cotton consumption. The international cotton price and domestic cotton price will also go through the process of game fluctuation to balance.

In 2018, China imported 1 million 580 thousand tons of cotton, the highest record in 4 years. The total cotton consumption in 2018 was estimated at 8 million 500 thousand tons, the proportion of imported cotton was about 18.5%, and the proportion of imported cotton in 2019 was expected to rise to more than 20%.

With the rising proportion of foreign cotton, the trend of international cotton prices will have an increasing impact on domestic cotton prices.

China's cotton consumption accounts for about 1/3 of the world's cotton consumption, while the domestic production demand gap accounts for 1/3 of consumption.

With the end of the round of cotton reserves, to make up for the gap, it is bound to expand the channels and scale of cotton imports. China will become the most important and largest incremental market in the global cotton market, or will guide the global cotton trade flow and reshape the cotton trade pattern.

However, the industry believes that in 2019, the proportion of imported cotton in China depends on its sex price compared with domestic cotton.

Under the tense situation of Sino US trade relations, coupled with the expected slowdown in global economic growth, textile enterprises will selectively purchase according to the price ratio of domestic cotton and imported cotton.

The price ratio between inside and outside cotton also determines to some extent the ratio of imported cotton to cotton in 2019 in domestic production and demand gap.

From the perspective of downstream spinning enterprises, the reasonable level of cotton price difference between inside and outside is 2000 yuan / ton ~3000 yuan / ton. The price difference between domestic yarn and imported yarn is quite similar in domestic market, and the demand of domestic textile enterprises to domestic cotton is also relatively stable.

When the internal and external cotton price difference is within 1500 yuan / ton, the domestic yarn is more competitive than imported yarn, and domestic textile enterprises are active in production and marketing, which will increase the purchase of domestic cotton.

When the cotton price difference exceeds 3000 yuan / ton, the cost of domestic yarn raw materials is too high, and the advantages of imported yarn will be highlighted.

In order to reduce the purchasing cost of cotton, domestic textile enterprises will be more interested in imported cotton, and domestic cotton demand may be suppressed.

At the moment, with the advent of 2019, Zheng cotton futures went out of a wave of rebound. In January 21st, the CF1905 contract of zhengmian main force reached 15480 yuan / ton.

Does that mean that the cotton market in China is getting warmer?

In this regard, the industry believes that the reasons for the rebound before the spring festival may have the following reasons: first, from past practice, the commodities coming near the Spring Festival, including cotton, will rise, and this rebound is no exception; two, textile enterprises are preparing for small quantities in a small batch to prepare for the start of the Spring Festival, while the downstream consumption will give certain support to the upstream market. Three, although the Sino US trade negotiations have not yet made clear achievements, the two sides are striving for a better direction and a positive signal to the market.

Then, what will be the trend of domestic cotton prices in 2019?

Expert analysis, macroeconomic environment, this year China will take a variety of measures such as large-scale tax reduction, tax reduction and proactive fiscal policy to ensure economic growth. It is estimated that the spot price of cotton market will oscillate in the first half of 2019, which is between 15500 yuan / ton ~16200 yuan / ton, and the cotton price in the second half of this year will rise sharply, or the high point may reach 17000 yuan / ton.

From the current domestic supply and demand situation, experts believe that in the short term, only because of low inventory, cotton prices do not have the conditions to rise. In the context of Sino US trade friction, slow demand is the core factor.

Cotton prices may remain weak in 2019, but with the drop in inventories, the bottom of cotton prices will become stronger.

Overall, the domestic cotton market was weak in 2019, and the price of zhengcotton futures was low throughout the year or in the first half of the year.