Domestic Cotton Market " Cold Winter " Not Yet.

After the holiday, the domestic cotton market overall performance is weak, the enterprises are immersed in the holiday atmosphere, the purchasing demand is weak, the high volume inventory continues to pressure the disk, and the Sino US trade consultation result is not ideal during the Spring Festival, which makes the market optimism fade, the US cotton fell below 70 cents / pounds key support, Zheng cotton broke the 15000 integer pass.

The domestic cotton spot market was stable, basically unchanged from the pre holiday season, and the price of imported cotton fell sharply. The import price of US cotton and India cotton fell to over 2%.

The cotton price difference between inside and outside was narrowed and cotton imports continued to increase. According to the statistics of Zhangjiagang cotton chamber of Commerce, from January 28th to February 11th, the import of cotton stocks in Zhangjiagang bonded area increased by 1328 tons to 42512 tons, of which 2712 tons of cotton increased, 118 tons of India cotton, 1227 tons of cotton in Brazil, and 567 tons of cotton in Australia.

Cotton inventory pressure is still large.

According to the latest report of the US Department of agriculture, China's cotton production is expected to increase. In 2018/19, China's cotton output will reach 5 million 995 thousand tons, an increase of 109 thousand tons over the previous forecast.

According to China's cotton notarization inspection network, as of February 14, 2019, the annual cotton processing volume of 2018 cotton reached 5 million 138 thousand and 942 tons, of which 4 million 860 thousand and 85 tons in Xinjiang and 278 thousand and 857 tons in the mainland.

In addition, in January 2019, Xinjiang released a report on cotton planting intentions. The report found that the cotton planting area in Xinjiang increased over the previous year, and the intention of the cotton association of China released in December 2018 was that the intention of planting cotton in Xinjiang was reduced by 2.1%.

As of February 14th, cotton warehouse receipts amounted to 19003 hands, 760 thousand and 100 tons of lint cotton, 4 million 959 thousand and 100 tons of commercial inventory in December, 853 thousand and 600 tons of industrial stocks, and industrial and commercial inventories were at the highest level in the past 8 years.

Downstream industry needs no improvement

At the end of the year, the China Cotton Textile Industry Association conducted research on cotton spinning in 9 provinces and autonomous regions in China, and the trade friction was the biggest uncertainty factor in the cotton textile industry.

In the survey, 80% of the enterprises started normal, 88% of the company's product inventory was at a normal level, some parts of the enterprises said that the product inventory pressure was larger. From the downstream inventory level, yarn and grey fabric inventory were all over the calendar year. In December, yarn inventory was 21.90 days, and grey fabric inventory was 31.98 days.

US cotton contract progress is still slow.

Affected by the Sino US trade friction, the signing of the US cotton contract in 2018/19 was slow, and the new contract volume continued to grow negatively. Data show that as of December 27, 2018, the US total cotton exports to China were 3 million 842 thousand and 910 packs, a decrease of 32.55% compared with the same period last year, and the reduction of US cotton exports to China will continue to drag down the US cotton prices.

Trade friction is the biggest uncertainty.

Affected by the Sino US trade friction, downstream demand continues to deteriorate, due to the reduction of foreign trade orders, the slow progress of raw material procurement, and textile enterprises are in the situation of "low inventory of raw materials and high inventory of products".

From the cotton textile industry PMI index, we can see that in the second half of the year, the new order index continued to be below 50%.

On the 14-15 th of February, China and the United States opened the third round of trade consultations this year, because the previous trade negotiations failed to produce results, the market sentiment declined, and the futures market prices fell.

Recently, Trump said that the deadline for the lifting of tariffs will be postponed for 60 days. The cotton spinning industry in China will still experience a cold winter, and the market will be subject to market sentiment.

On the whole, the cotton market is full of pressure, lack of uplink power, high inventory of cotton, insufficient demand, prominent contradiction between supply and demand, and spot price will continue to adjust downward to digest high inventory.

The Sino US trade consultation period continues to postpone the probability of a larger delay, the textile industry will still bear a lot of pressure, domestic cotton futures prices may continue downward pressure, but due to the low raw material inventory of downstream industries, just need procurement support, short-term price is expected or in the 14700-15700 range concussion.