The Opening Of "Cotton Three" Market Has Become History?

The smell of the spring festival gradually dissipated, and cotton people continued to return to work. The cotton market quietly resumed in firecrackers. It is understood that although most of the cotton business has been opened, most sales staff have not yet opened.

According to the Statistics Bureau of Xinjiang autonomous region, the output of Xinjiang cotton reached 5 million 111 thousand tons in 2018/19, an increase of 11.9% over the previous year, accounting for 83.8% of the whole country. It increased by 7.3 percentage points from the previous year, of which Xinjiang cotton production increased by 2 million 46 thousand and 500 tons, an increase of 20.7%, a record high, and cotton output accounted for 33.5% of the country, accounting for 40% of the autonomous region. At present, the domestic supply of cotton is adequate, and the index can completely meet the production requirements of all kinds of yarns. Therefore, the quantity and index of lint at this stage are not the factors leading to the difficult opening of the cotton market this week.

Cotton backlog is not sold because the price is too high? For buyers, the lower the price the better, and sellers' calculations of lint costs are also abacus. It is understood that before and after the Spring Festival, the mainstream price of lint cotton basically remained unchanged, and the 3128B of Xinjiang's machine picked cotton in 2018/19 was basically maintained at 15500 yuan / ton. As shown in Figure 1, the first week of Zhengzhou cotton market was greatly suppressed, and the weekly price dropped 245 points, or 1.61%, and fell below 15000 mark. The price of lint resources settled at the base price point also dropped by 200-300 yuan / ton. Therefore, I believe that the price of lint is not the main factor that makes the cotton market difficult to open.

Fig. 1 closing price chart of zhengmian main company in the first week after the holiday

As the export of textile and clothing is blocked, the cotton lint consumption rate of the downstream cotton mill is slowed down. At the same time, as shown in Figure 2, after a round of year-end stocking, the national cotton industry inventory in 2019 is much higher than that in the 2017 and the same period in 2018, which basically can be used for the downstream cotton mills for nearly a month and a half. This week, the cotton mill began to resume production, and the enquiries from the downstream customers were more, but the number of orders was less, and the raw materials were basically based on the existing lint stock. Therefore, the main reason for the difficult opening of the cotton market this week is that the downstream cotton mill has full stock of lint and basically no procurement needs.

Figure 22017-2019 national cotton industry inventory statistics

In 2018, after the completion of the national cotton store, the reserve cotton remained about 2 million 700 thousand tons. Due to the long storage years, a part of the cotton quality has not reached the qualified line. If the dumping and storage work is carried out this year, it is expected that the total number of RPG will be less. In 2018, the reserve cotton company announced the news of the launch 1 months ahead of schedule. This year the official has not announced the news of the national cotton store in 2019. Therefore, the possibility of coming out in March is low, or the supply of the lint market is effectively controlled.

The downstream textile industry has the "gold three silver four" argument, because the Sino US bilateral economic and trade differences, so that in 2018 and April, the peak season was not prosperous. Recently, China and the United States have conducted specific consultations on the text of the memorandum of understanding on economic and trade issues between the two sides. This is the first time that the memorandum of understanding has been mentioned publicly, showing the degree of progress between the two sides. Now that March is coming, whether the cotton market can break the curse and return to the right track, we still need to pay close attention to the latest news of Sino US economic and trade talks.