What Is The Impact Of The Reserve Cotton Rotation On The ICE And Foreign Cotton Spot Market?

Since mid April, the state has issued 800 thousand tons of quasi tariff cotton import quotas and about 1 million tons of cotton reserves. Two "boots" have come to the ground. The Chinese cotton storage wheel has been delayed but not broken. For most cotton related enterprises, investment institutions and market makers, the political situation is very clear, and the hanging heart can finally be put down.

The author thinks: first, the 1 million tons of reserve cotton wheels are lower than the expectations of all parties.

Precise control of the gap; second, because the rules have not yet been issued, whether this is a "textile special" or allowing traders to participate in the auction is not yet clear, but in terms of quantity, it is likely to exclude traders.

What is the impact of the reserve cotton rotation on the ICE and foreign cotton spot market?

In April 23rd, ICE futures dropped, while the July contract opened the 78 cent integer pass. However, from the changes in position, decline and market sentiment, China's 1 million tons of reserve cotton were short and short for the rebound of ICE, but it did not change the trend of disk oscillation and gravity shift. Cotton mills and import enterprises should grasp the rhythm of the "bargain buying".

First of all, in 2019, the scale of cotton reserves was significantly lower than that of the previous years. It is still necessary for small and medium-sized textile mills to "quench their thirst". In the 5 and June, the supply of low quality and low index cotton is not expected to change.

Second, the reserve cotton has an impact on imports of low-quality cotton from India, Mexico, Greece and Africa. After all, the quality of national cotton and some imported cotton overlaps, and India cotton continues to rise due to CNF, CIF and other quotations. The price competitiveness is not only significantly lower than that of the US EMOT, but also weaker than that of the reserve real estate cotton (in April 23 and 24 S-6 1-5/32 sliding tariff, the import cost reached 15200-15300 yuan / ton, and the traders' RMB quotations were also nearly 15300-15400 yuan / ton), but it had little impact on the export of high-quality cotton, such as the US cotton and the Australian cotton, and the United States cotton or less than 300 thousand tons could be selected by global buyers as at the end of April.

Thirdly, according to the 1 million ton arrangement, whether China will issue additional import quotas in 9 and October is worth paying attention to.

From 2017/18, in the case of a turnover of 2 million 510 thousand tons of cotton reserves, a total of 1 million 330 thousand tons of cotton were imported. From the prediction of the national cotton market monitoring system and USDA, China's cotton imports in 2018/19 were 2 million 40 thousand tons and 1 million 742 thousand tons, respectively, which increased by 40-70 tons compared with the previous year. And even the 100% cotton turnover was less than 1 million 500 thousand tons in the year of 2017/18, and the supply gap of nearly 80-100 million tons was worth considering.