Analysis Of 800 Thousand Ton Cotton Import Sliding Quota Quota Landing Market

In April 12th, the NDRC issued a notice on the application of import tariff quotas for the preferential tariff rates of cotton tariff quotas in 2019.

The cotton import quota is 800 thousand tons, all of which are non state trading quotas. The application time is from April 15 to 29, 2019.

It is understood that the number of imported cotton sliding quasi tax quota is consistent with that of last year, which is 800 thousand tons. The difference is the time when the policy was introduced. Last June, when the weather was short of speculation, the cotton yield went through the bull market.

People in the industry should know that cotton prices have been quiet for a long time in the doldrums since the end of last year.

However, since April, when the main cotton producing areas in China have entered the stage of preparation for broadcasting, the spot price of cotton has risen sharply in recent years, and Zheng cotton has been collecting Yang for many days.

Even in the night trading on the day of the announcement of the national development and Reform Commission's announcement of the 800 thousand tons of cotton import quotas, both the cotton price and the cotton price in the international market rose sharply.

What has happened to the market?

How to interpret it?

The market interpretation of the 800 thousand tons of cotton import slip tax quotas

[CITIC futures] slide quasi tax quota landing, external cotton drive to strengthen.

On the surface, import volume has increased in the future, and the contradiction between production and consumption has been further eased. But the sliding tax price is more difficult than the domestic 3128B index price.

Combined with the past situation, the reserve cotton wheel is out of sight. The quasi tax quota has been reported in advance. It is difficult to conceal that the market is worried about the low inventory of state-owned cotton stocks, and continues to support the rising trend of Zheng cotton.

The impact of the national cotton rotation on the market in the future will be weakened, and the domestic cotton market will be driven mainly by the external cotton market.

From the USDA4 monthly outlook report, we can see that although Turkey has slowed down its cotton consumption due to its own economic situation, global consumption is still showing a steady growth trend, and the trend of the continued reduction of the stock market in India, the United States and Pakistan in accordance with the trend of the international cotton market continues to follow. The strong trend of the domestic and foreign cotton market has been formed.

Domestic cotton market demand still needs to be further improved. Although cotton prices have risen, there has been no significant change in the downstream situation. The turnover of textile enterprises is slow and raw material stocking intentions are general. In the short term, cotton prices are weak in the 15600-16000 interval, and the pressure on the top 16000 is too obvious. It is recommended not to catch up with high prices, more or less part of the profit margins, and to bargain at 15600 near the 909 contracts.

[China cotton net] the import quota of 800 thousand tons of cotton is "stimulating and difficult to blowout".

First, trade negotiations between China and the United States will continue to take place in the month of 4/5. Despite the continuous release of good results, everything is unknown before signing the agreement.

The NDRC decides when to issue 800 thousand tons of cotton import quotas or to wait for the outcome of Sino US negotiations.

Second, under the quasi tariff tariff, the competitiveness of the outer cotton industry has declined, and the textile enterprises will be able to pick up three goods.

Third, the sliding tariff quota will be postponed to 6/7 months, and the focus of cotton enterprises' attention and signing will turn to 2019/20.

From the point of view of market supply, except for American cotton, only India cotton and Mexico cotton can be selected (Australia cotton has basically been sold out, and Brazil cotton has low quality and poor spinnability). After June, India S-6, J34 and MCU5 bonded volume may not be sufficient.

Fourthly, the supply of cotton in China is relatively adequate, and whether the cotton reserves remain unchanged in 2019.

According to the survey data of China Cotton Association logistics branch, the total cotton business inventory in the end of March was about 4 million 164 thousand tons, down 401 thousand and 200 tons from last month, still in a high position.

Fifthly, the positive effect of the issuance of the sliding tariff has been released in advance, and the textile enterprises and traders have been very calm.

[China Textiles Import and Export Chamber] issue more cotton import slip tax quotas for foreign trade enterprises.

The announcement of the announcement brought "timely rain" to textile and garment exporting enterprises using imported cotton.

In the short term, it has solved the urgent need of cotton for enterprises, and helps to maintain the sustainable development of the textile and garment industry in the long run.

First, high quality cotton helps export enterprises to stabilize the high-end market.

At present, domestic textile and garment export enterprises mainly focus on the global high-end market, and customers are strict with raw materials. Importing high-quality cotton can meet the quality requirements of procurement.

In recent years, export orders for Pima cotton, Australian fine staple cotton and Egyptian cotton have been increasing year by year.

The production cotton provides the whole process traceable cotton usage information.

Timely issuance of quasi tax quotas will help enterprises to stabilize overseas high-end strategic customers.

Two, it helps enterprises to reduce costs and achieve fair competition with neighboring countries.

Textile and garment export enterprises achieve fair competition with foreign competitors, especially those in Southeast Asian countries, by purchasing cotton.

At present, raw material prices account for a relatively large proportion of export costs, while imported cotton has a significant advantage over domestic cotton prices (about 1500 yuan per ton of cotton price).

In addition, the purchase of cotton can also reduce the cost of financing to a certain extent and alleviate the pressure of enterprise funds.

Generally speaking, in the international futures market, the acquisition of foreign cotton, enterprises get 90-120 days of letter of credit.

Compared with the domestic cash purchase of cotton, the interest rate in the US dollar forward interest rate and RMB loans is about 2%, which saved the textile and garment enterprises with low gross margin to a considerable extent.

Three, establish credibility and image in China.

Chinese textile and garment export enterprises have won the recognition of buyers with good reputation and high quality products for many years.

Some home textiles and garment enterprises are gradually becoming the world's largest high-end yarn dyed fabrics and home textile producers. They have become the pronoun of "China's high-end textiles" in the international market.

The international market and partners not only represent the enterprises themselves, their credibility and performance are also the image of Chinese textile and made in China.

Four, the long-term stability of the cotton policy helps to enhance the competitiveness of the textile and garment industry.

Through many years of development, China's textile and garment industry has formed a competitive advantage through the upstream and downstream industries chain, and has met the rapid response and quality requirements of international procurement with a strong adaptability.

More and more excellent textile and garment enterprises have completed the development process of the whole industry chain production enterprises (from cotton spinning, dyeing, finishing to finished products) through continuous pformation and upgrading, and maintained certain profit margins in the open and competitive market.

Under the globalized resource allocation environment, the effective resource allocation of raw materials such as cotton will help stabilize the domestic production and operation of cotton spinning enterprises and expand reproduction. In the long run, it will help to enhance the global competitiveness of China's high-end textile and clothing products.

Shanghai chief strategist, Wu FA Xin, Ltd.

The issuance of cotton import slide tax quota of 800 thousand tons was finally "official propaganda", which is "boots landing."

It is a very wise way to adjust the gap of raw material supply in the domestic textile industry by quotas. "To enter and attack, retreat and defend" can not only make the government spend a lot of money to subsidize, but also make foreign materials with high cost performance "use for our own".

He believes that the US cotton will further rise under the news, but advises investors not to catch up.

In addition, the issuance of quasi tax quotas for cotton imports will make the difference between domestic and foreign cotton smaller and smaller, and can "push" the domestic cotton circulation system reform.

For example, at present, the automation level of machine picked cotton in Xinjiang area is getting higher and higher, and the cost of cotton in Xinjiang is also getting lower and lower.

This is a good news for the entire textile industry.

It is also understood that in the future, the relevant agencies may release cotton slip quotas again after the second half of this year, according to the needs of the downstream market.

Other interpretation of the market is as follows:

The anticipation of the shortage of cotton resources in China has been confirmed. The early issuance of quasi tax quotas for cotton imports by the relevant agencies is aimed at preventing the sudden increase in prices.

At the time of the new cotton season in China, issuing cotton slip quotas will surely suppress prices. This will reduce the enthusiasm of cotton growers in China and will not be conducive to the improvement of cotton production in China.

At present, the domestic market is not short of cotton, the remaining part of the stock "broken cotton" has not been digested, not to mention the number of futures warehouse cotton warehouse receipts is still large, at this time, cotton import slip tax quota is incomprehensible, is it to want to "die" in the domestic market.

The issuance of cotton import quota is a double-edged sword. It should be issued instead of being issued.

The cotton import quota of nearly 900 thousand tonnes of tariff quotas issued earlier this year did not consider export enterprises, which led to the quasi tax quotas for cotton imports which tend to be exported to enterprises. Due to the difference between the price of imported cotton and the domestic prices under the sliding tariff, the quota will not impact domestic cotton market, but also help export enterprises to do well in operation.

Domestic cotton market is not big, market demand is so much. Increasing imports means that domestic resources will be squeezed out, and the domestic cotton industry will be revival in the future.

Since the end of last year's storage of cotton stocks, there has been a strong cotton sentiment in the market. At that time, the measures taken by the relevant institutions were too far away from the market. Eventually, the domestic market did not fully digest the cotton resources in the market, and pushed the related industries to "change their minds to the outside world", and the market mechanism could not be brought into full play.

Inflation has come, and the domestic market for agricultural products, especially cotton, oil, sugar, corn and other markets are in the value depressions, and the price of cotton is rising too normal.

Is inflation expectation the "backbone" of rising cotton prices?

In March, domestic financial data generally improved, especially for short-term loans made mainly by consumer loans, up to 429 billion 400 million yuan and a record high.

It is understood that in March, the social credit and credit data super market expectations have triggered widespread discussion in the market, and have become the main basis and support for the domestic and foreign stock index to rise steadily.

Zhou Jun, general manager of magpie capital, believes that futures options for agricultural products are becoming the focus of attention in the future market.

Since 2018, market participants have said that the price of agricultural products is at a low level in history, and the bull market of agricultural products is expected to be brewing.

A careful analysis of the price index of agricultural products shows that it has fallen from 225.14 at the beginning of 2011 to 124.84 at the lowest level in February 2016, with a 44.5% decline.

The current index is 147.23 points, which is only 17.9% higher than the lowest index, and is still in a low historical position.

Since the beginning of 2019, the monetary and fiscal policies of the country have been frequent, and the macro and financial resources have been ample.

From the valuation point of view, investors should focus on the agricultural products market, especially in the previous period, with the lowest fundamentals, low price and low possible supply market.

Under normal circumstances, the demand for agricultural products market is very stable. The key point for the price trend should be placed on the supply side. However, in the face of macro and financial conditions, the demand for agricultural products is expected to exceed expectations. The supply side is not as good as expected, and prices will easily rise or fall. If the supply side is substantially reduced due to low yield or natural disasters, the price of the breed is expected to take the lead in opening the bull market.

Judging from the current basic situation of cotton market in China, there are still no substantial changes in the market. However, the enthusiasm for trading and the price of the paction are heating up. It is suggested that industrial enterprises should learn lessons from the loss of cotton prices in previous years, and observe and operate prudently.