Domestic Cotton Price Center Will Continue To Uplift

During the Spring Festival, under the influence of USDA's reduction in global cotton consumption and the impact of the US cotton planting area in 2019, the price of international cotton fell under pressure.

At present, the new cotton picking is basically over, and the seasonal storehouse is continuing. At the same time, the textile exports in the lower reaches of the January have a good start.

Short term Zheng cotton warehouse receipts pressure remains; in the medium and long term, domestic cotton supply gap and national reserve stocks are very low, so the domestic cotton price center will continue to move upward.

Domestic cotton seed sale increased year on year

According to the national cotton market monitoring system, the survey data of 1140 households in 57 counties and 14 provinces in Xinjiang showed that the new cotton harvest basically ended in February 15th, and the national selling rate was 97.2%, an increase of 1.5 percentage points compared with the same period last year, which increased 2 percentage points over the past 4 years, of which 100% of the sales rate was in Xinjiang.

As of February 15th, the total sales of seed cotton and lint cotton 5 million 903 thousand tons increased by 49 thousand tons over the past 4 years, compared with the average value of 525 thousand tons in the past 4 years, including 5 million 10 thousand tons of cotton seed sold in Xinjiang, 5 million 783 thousand tons of cotton linen, an increase of 173 thousand tons compared with the same period in the past year, an increase of 693 thousand tons over the past 4 years, of which 5 million 7 thousand tons of lint were processed in Xinjiang, and a cumulative sales of 2 million 428 thousand tons of cotton lint, which decreased by an average of 19 tons compared with the previous year.

Zheng cotton warehouse list hit a new high since listing

As of February 18th, there were 17191 cotton warehouse receipts and 2016 effective forecasts. The number of warehouse receipts was about 10 times that of the same period last year.

Although new cotton has been processed in large quantities, cotton is in a seasonal accumulation stage, but the huge amount of warehouse receipts deserves continuous attention, and its pressure on the disk should not be underestimated.

A sample survey of the national cotton market monitoring system showed that the average stock usage days of the enterprises surveyed by the year February were about 44.6 days (including the quantity of cotton imported to Hong Kong), an increase of 4.3 days, an increase of 2.7 days compared with the same period last year.

Projections of the national cotton industry inventory of about 985 thousand tons, an increase of 10.6%, an increase of 5.1% over the same period.

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

January textile and garment exports opened up

According to customs statistics, China's textile and apparel exports in January 2019 amounted to US $25 billion 63 million, an increase of 8.42% over the same period, an increase of 8.47% over the same period last year, much higher than the average growth rate in 2018.

Exports of textiles (including textiles, yarns, fabrics and articles) were 11 billion 412 million US dollars, an increase of 14.29% over the same period last year, and exports of garments (including garments and accessories) were US $13 billion 651 million, an increase of 4.04% over the same period last year.

RMB denominated in January, China's textile and clothing exports 172 billion 880 million yuan, an increase of 14.06% over the same period last year.

In the case of the global economic and trade situation is not optimistic, the Sino US trade negotiations are still in a sensitive period. In January, textile and garment exports exceeded expected growth. The export volume rose to the highest level in September. The main reason is the "wrong month" effect of the Spring Festival. At the same time, the enterprises have the power to "grab export" before the deadline for China to impose tariffs on March 1st, so the export data in January are good, but they do not reflect the real export situation.

From a trend perspective, China's textile and garment exports will continue to be under pressure.

To sum up, the new cotton harvest is basically over, and seed cotton sale is faster than the same period last year.

From the data of textile and garment exports in January, the downstream demand has improved. Although the Sino US trade negotiations are still under negotiation, they should not be overly pessimistic.

In the short term, the number of warehouse receipts with high innovation will suppress Zheng cotton price.

From the technical point of view, the bottom of the cotton price has been formed, and the average length of the average line is obvious.