Cotton Market Quotes: Can Cotton Price Withstand 15000 Yuan / Tonne Pass?

Entering April, Xinjiang cotton began to enter the planting period next year. As of March 29th, Xinjiang sold 2 million 788 thousand tons of lint cotton, 2 million 917 thousand tons in the same period last year, more than half of Xinjiang cotton sold, and the amount of cotton warehouse warehouse volume exceeding 800 thousand tons. The logic of consumption is still shrinking. Last week, under the influence of market news, Zheng cotton futures fell sharply, hitting 15000 yuan / ton low. India cotton 2018/19 listing volume continued to expand year-on-year decline, USDA3 planting intentions report is significantly lower than expected, cotton support is strong, the difference between domestic and foreign cotton prices are expected to maintain low operation, domestic cotton price 15000 yuan / ton support whether continue to be effective?

Industrial inventory structure is more neutral to the future market.

At the end of February, domestic circulation stocks (Industrial inventories + commercial inventories) amount to 5 million 370 thousand tons, and the latter is expected to continue to decline. Assuming that the 2019 national cotton reserves are not considered, domestic circulation stocks are expected to be around 3 million tons at the end of June this year, down from the same period last year.

The inventory structure of the industrial chain is better, the raw material inventory of the mill is 1-2 months, and the finished product inventory is 10 days -1 months, which is lower than that of the same period last year. With the continuous shrinkage of cotton prices in recent years, the import price of imported cotton has decreased, the import cotton trade has been reduced, and to some extent, it has been supported by domestic cotton prices. At present, more resources are available, and textile enterprises are cautious in replenishment. The impact of the industrial chain inventory on the market outlook is more neutral. By the end of March, the 2018/19 cotton warehouse receipts in the futures market exceeded 800 thousand tons in the year of 2018/19, which accounted for more than 17% of the domestic circulation stocks at the end of March.

USDA3 month US cotton planting intention report is lower than expected

The USDA3 month planting intention report predicts that the US cotton planting area will be 13 million 780 thousand acres in 2019/20, which will be reduced by 2% compared with that of 2018/19. The reduction in the area will be mainly due to the state and Georgia area. The market is expected to be 14 million 498 thousand acres, and the actual area of 14 million 99 thousand acres in 2018 is lower than expected. The report will serve as the basis area for the first crop estimation of the next USDA season. The market is expected to change the supply side of the next year's balance sheet of the US cotton market. The adverse weather factors from planting during the planting season are more likely to cause market concerns.

On the whole, the Sino US trade negotiations continue to release good news this week. Whether the import increment is going to enter the Chinese market through the issuance of quasi tax quotas or other ways, the impact is different and needs close attention. The industry is cautious in replenishment, and the stock structure is more neutral for the future market. However, the cotton price is facing the pressure of hedging, and the price difference between the inside and outside of the plant is still running low. The center of gravity of the market is gradually changing to the next year. The adverse factors from the weather are more likely to cause market concerns. Zheng cotton's 15000 yuan / ton support continues to be effective, and the warehouse pressure is expected to be postponed through the 5-9 shift.