The Expected Impact On Cotton Prices Will Be Limited.

Downstream demand for good, raw materials have replenishment needs, domestic cotton business inventories in February dropped significantly.

However, by the expected impact of throwing storage, Zheng cotton for nearly half a month since the concussion trend, the main 9105 contract is actually 15100 - 15500 yuan / ton range narrow fluctuations.

We expect that before the policy of dumping and storage is clear, it is difficult for Zheng cotton to shake off the shock pattern.

Demand is improving, and commercial inventories have declined significantly.

With the arrival of the small peak season in March, the yarn and grey fabric start up rate has risen to the level of late last October.

In terms of product inventory, yarn and grey fabric decreased significantly compared with February.

Due to the easing of trade friction between China and the United States, the market is generally optimistic about the future market, coupled with the downstream demand, yarn prices have risen steadily, and the C32S yarn price index has risen 30 yuan / ton compared with the same period last month.

In the first two months of this year, Sino US trade frictions were intensive, giving positive signals to the market. At the same time, after the Lantern Festival, the downstream operations resumed significantly, and the stock of raw materials was also consumed.

Two reasons led to a marked decline in domestic cotton industry and business inventories in February.

By the end of February, the domestic cotton industry inventory was 809 thousand and 300 tons, a decrease of 44 thousand and 300 tons, a decline of the highest in the past four years, a commercial inventory of 4 million 565 thousand and 200 tons, a decrease of 283 thousand and 400 tons, a decline of the highest level in nearly four years.

Meanwhile, the progress of new cotton sales is slowly improving.

According to relevant statistics, as of March 15th, the national cotton sales progress was 51.2%, the speed up by 3.5 percentage points, 3 percentage points lower than the previous year, the lowest since December last year, and 11.2 percentage points less than the four years, the lowest level since last year's 12 yuan.

Dumping reserve expectations, downstream procurement prudence

It is reported that in early March, the Reserve Bank of Shandong has begun preparations for the reserve inspection of cotton reserves.

Market speculation has long been showing signs of cotton throwing and storage, but time is still unknown.

In the past two cotton years, cotton began to work in the cotton rush hour in March, and the announcement was earlier.

So far this year, no clear news has been released.

On the one hand, this is because the stock of cotton reserves in the reserve bank is reasonable this year, but we think the main reason is the Sino US trade friction.

On the one hand, the increase of cotton reserves has increased market supply. Undoubtedly, cotton prices are a pressure on cotton prices at present.

On the other hand, compared with new cotton, reserve cotton has the advantage of price and can effectively reduce the comprehensive cost of cotton enterprises.

As a result, downstream cotton companies are hoping for a reserve cotton rotation, and the current replenish of raw materials is more prudent.

In addition, according to the relevant data, the sale of real estate cotton is better than Xinjiang cotton so far this year.

According to the domestic cotton business inventory data in February, by the end of February, the proportion of Xinjiang cotton in commercial inventories was 74.76%, the highest in recent years. From the sales progress data, the latest sales data showed that the sales progress of Xinjiang cotton was 49.7%, down 4.5 percentage points from the same period last year, and the decline was more than the average.

The main reason for the better sale of real estate cotton is that the price is more advantageous than that of Xinjiang cotton.

Effective supply of imported cotton increased

At the beginning of this year, the spread of cotton prices at home and abroad rapidly increased, and imported cotton began to be favored by the market.

Since mid February, the domestic and foreign cotton price spreads have dropped at a high level, but they are still above the spread range of last year.

On the one hand, the spread of cotton prices at home and abroad has increased, and the price advantage of imported cotton has been highlighted. On the other hand, cotton imports have increased significantly as the quota expires.

In December last year, 220 thousand tons of cotton imported from China increased by 90 thousand tons, an increase of 120 thousand tons compared with the same period last year. In January this year, 280 thousand tons of domestic cotton were imported, an increase of 60 thousand tons, an increase of 150 thousand tons compared with the same period last year.

A large number of imported cotton occupy the consumption space of domestic cotton.

It is reported that textile enterprises show a strong interest in low-priced imported cotton, and enquiries and orders continue to be hot.

Because of the price advantage of cheap imported cotton compared with Xinjiang cotton, the demand for cheap imported cotton increased.

However.

At present, although the port outgoing volume is large, the new goods are also being put in storage one after another.

Huge pressure on warehouse receipts

According to the warehouse receipt data of Zheng Shang, as of yesterday, the warehouse warehouse receipt of Zheng cotton has reached 680 thousand tons (including a small amount of warehouse receipts to be written off in 17/18), which is 2 more than that of 2008's historical highs. The effective forecast is 146 thousand tons.

Among them, the volume of registered warehouse receipts has been stable since the beginning of this year, and effective forecasts show explosive growth since March.

The establishment of a cotton delivery warehouse in Xinjiang has greatly facilitated the registration of Xinjiang cotton warehouse receipt. At the same time, due to the poor sales situation, the futures market has become the preferred way to increase sales channels.

We expect that the huge volume of domestic cotton warehouse receipts will not outflow in the short run, and the pressure will continue for a long time.

At the beginning of this month, the United States announced that it would postpone the introduction of a tariff plan for Chinese goods exported to the US, and the market is expected to be good for the market.

According to media reports, China and the United States have made further substantive progress in the text, but the specific contents have not yet been released.

The Sino US trade frictions have not made clear results so far. The two sides are more cautious.

Moreover, there are domestic expectations of dumping and storage, and cotton companies are hoping for reserve cotton throwing and storage. In the context of sufficient spot resources, the strategy of using mining along with them is more common, which is not conducive to higher cotton prices.

Although domestic cotton business inventories declined significantly in February, they are still in the same historical highs, and the pressure of supply remains to be further digested.

Cotton planting in China is going to be closely watched.