Another Boot Is Landing! Central Reserve Cotton 1 Million Tons Began To Rotate Market In May 5Th.

In April 23rd, the State Grain and material reserve bureau and the Ministry of Finance announced that in order to optimize the structure of central cotton reserves and ensure good quality, some central cotton reserves would be rotated in 2019.

The notice indicates that the time of reserve cotton rotation is the national statutory working day from May 5, 2019 to September 30, 2019.

The total quantity of round trips is about 1 million tons.

We should put in a balanced operation and sell about 10 thousand tons per working day in principle.

Good rain knows season, but spring happens.

If the landing of 800 thousand tons of cotton import quasi tax quotas in April 12th was a "reassurance" for importing cotton enterprises, then the news that the central reserve cotton 1 million tons began to rotate into the market yesterday is a timely rain in the domestic cotton market.

Although the recent upward trend in cotton prices has made textile enterprises very anxious, fortunately, domestic cotton stocks have finally entered the market in a timely manner.

So what is the difference between this round and the past?

First of all, from time to time, the stock of cotton entering the market is relatively late.

Secondly, from a quantitative point of view, the number of stocks of cotton entering the market is relatively small.

How much impact will the 1 million ton cotton rotation market have on the cotton market?

According to the analysis, 800 thousand tons of quasi tax quota information has been issued before, and now 1 million tons of cotton reserves have been delivered, which fully guarantees the domestic cotton supply, helps reduce the cost of cotton production, ensures product competitiveness, alleviating the supply and demand tension this year, and the downstream consumption will enter the off-season. The probability of future cotton weakening will weaken.

According to the insiders, the landing of the reserve policy is short-term and bearish. From the current spot market new cotton paction situation, this year's low price upland cotton is favored by the market, and the textile enterprises are waiting for the supplement of low price cotton to lower production and low cost.

The deal is expected to be more popular and will boost spot cotton prices.

In addition, from the total amount of cotton reserves, there will be support for cotton prices.

Market analysts believe that, on the surface, the reserve cotton market is bad for the market, but in fact it is not necessarily.

According to the source, the low grade cotton is still more competitive in the market from last year's cotton reserves.

The source said that

Yesterday, the news of the launch of the reserve cotton market has just been announced, and the market needs some time to digest. The specific market trend will wait until the official launch in May 5th, combined with the future textile consumption demand situation.

"The impact of this throw on the market is neutral and will not cause too much impact on the market."

Li Zhenhua, research director of Xinjiang Lihua cotton industry Limited by Share Ltd

Li Zhenhua said that many small and medium-sized enterprises even consider shutting down the problem. In the recent two months, these enterprises should have realized that the reserve bonus is only about two years away. This year, the market mentality of RPG is totally different from last year.

This year, the total amount of storage will be limited.

It is expected that the overall turnover will be in the first few days, and the rate of return will not be very large. It is estimated that the difference between the reserve cotton and the new cotton will continue to shrink this year.

As for the reason that the domestic cotton market has not suffered a great deal of impact, Li Zhenhua believes that the supply of cotton reserves is not in conflict with the supply of cotton market this year. The main problem is that this year's market is short of low price and low grade cotton resources. The reserve cotton is relatively satisfied with this demand, but it is for the domestic low grade and low price cotton supply, except for real estate cotton, the others are basically Xinjiang cotton, and the whole is the state of resource mismatch. If the former low grade cotton spinning enterprises will not buy Xinjiang cotton, then the rear will not actually affect the demand for Xinjiang cotton.

In the short term, textile mills do not need high-grade cotton to produce, even if they stop production, they will not buy high-grade cotton.

Because the order does not match, textile enterprises are unwilling to buy Xinjiang cotton and increase production costs, so the impact on the domestic market is not direct.

On the contrary, the impact on foreign markets is more positive, because for foreign markets, if China is short of medium and low grade cotton, the textile enterprises will stop production, then the yarn they produce will inevitably be filled by imported yarn, at least part of which will be filled by imported yarn, so the import of short term low grade cotton will be compensated after the rotation is made, so the import of imported yarn will be restrained.

Due to the fact that the relevant implementation rules have not yet been published, there are still other factors that may be identified.