Zheng Cotton Futures Contract Down Cotton Spot Deal Cold

In May 10th, the US tariffs on the US $200 billion export to China increased from 10% to 25%. No agreement was reached in the eleventh rounds of negotiations between China and the US, and the progress of Sino US trade negotiations was tortuous.

The supply and demand report released by the US Department of agriculture (USDA) on May showed that the US 2019/20 cotton inventory at the end of the year was estimated at 6 million 400 thousand bales, representing an increase of 1 million 800 thousand packages over the previous crop year.

The US cotton inventory at the end of 2018/19 is estimated at 4 million 650 thousand packages, higher than the 4 million 400 thousand package forecast in April.

Affected by this, ICE cotton cotton futures contract fell to a one and a half low on Friday.

International cotton market turbulence, domestic cotton futures in May 13th after the opening of the morning market also plummeted, and finally the main contract CF1909 closed with 14560 yuan / ton, reaching the low level since July 2017.

At the same time, the panic of market participants is increasing. Some businessmen even speculate that the current slump may be a starting point.

At present, capital investors are interfered by macro factors and have left the field to wait and see.

In addition, in May 10th, the economic and Trade Department of the NDRC issued the announcement of the application of the quasi tax quota to the enterprises. It indicated that the quota was coming soon, and the industry merchants were worried about the pressure of the late lint sale.

According to recent research, some enterprises in Shandong, Hebei and other parts of the country expressed concern about the current market, and ceased the acquisition and purchase of seed cotton. Many traders also indicated that futures prices were plunged, and spot purchases and sales stalled.

And part of the cotton processing enterprises in Xinjiang because of the loan repayment period is approaching, for lint sales work is even worse, at present, only by reducing the price of goods.

In addition, many textile companies have slowed down the pace of purchasing cotton and stopped waiting for enquiries to wait and see.

Recently, due to the concentrated release of the negative factors, operators' enthusiasm has been hit, and the cotton business has been cold again. The cotton market will experience a brief "cold winter" period. It is suggested that the relevant industry find ways to deal with the problem in a variety of ways to reduce the losses caused by the market shock.