Domestic Cotton Prices Fall, International Cotton Prices Rise (5.20-5.24)

This week, domestic cotton prices continued to fall, international cotton prices rose, domestic cotton yarn prices increased, yarn prices dropped overall, and polyester staple prices weakened significantly.

First, domestic cotton prices continue to fall.

This week, domestic cotton prices continued to fall amid the tension between China and the United States and the weakness of downstream markets.

On the 20-24 day of May 2019, the B price index of cotton prices on behalf of the mainland's standard grade lint average was 14804 yuan / ton, down 399 yuan / ton last week, or 2.62%; the average settlement price of Zhengzhou cotton futures contract was 13679 yuan / ton, down 528 yuan / ton, or 3.72%, compared with last week; the average price of cotton reserve delivery was 13148 yuan / ton, down by 385 yuan / ton, or 2.85% percent.

Two, international cotton prices have risen.

This week, the US cotton seed delay and contract volume increased significantly, and the international cotton price rose.

On the 13-17 th of May 2019, New York cotton futures contract settlement price of 67.57 cents / pound, up 1.3 cents / pound, or 1.96%, representing 79.49 cents / pound of the international average cotton price index (M) of the main port of China, which rose 0.98 cents / pound compared with last week, or 1.25% yuan. The import cost of the imported RMB was 13346 yuan / ton.

(see Annex 1 for details)

Three, domestic and foreign cotton yarn prices are weakening.

This week, the domestic cotton yarn market was trading lightly, inventory increased, the price of pure cotton yarn increased, the demand for international cotton yarn was not good, the price of yarn was falling rapidly, the average yarn price of conventional cotton yarn was lower than that of domestic yarn, 225 yuan / ton, domestic cotton fabric orders were reduced, stock increased, cotton prices were accelerated, and polyester staple prices increased with the decline of raw material PTA.

Four, outlook for the future

The declining trend of international cotton prices continued. In April, US retail sales declined, the US manufacturing PMI fell to 50.6 in May, the lowest since September 2009, and the Markit manufacturing PMI in the euro area was only 47.7, which remained at a low level for nearly six years. After a series of weak economic data released, a number of agencies lowered their economic growth expectations, coupled with uncertainties in the trade tensions, and market confidence was weakening.

As for international cotton fundamentals, as of May 19, 2019, the US cotton sowing rate was 44%, an increase of 18 percentage points from the previous week, a decrease of 6 percentage points compared with the same period last year. The new cotton harvest in the southern hemisphere is about to begin. The Brazil cotton Exporters Association expects that the export of cotton in Brazil will increase by 35% to 1 million 700 thousand tons in 2019, and the output will increase from 2 million tons to 2 million 640 thousand tons in Brazil.

At present, Australian cotton harvested more than half, and the cotton field in northern Australia has been successful. Authoritative industry organizations predict that Australia cotton output will recover after 3 years.

In the international spot market, cotton prices plunged to increase sales of US cotton. In May, the net contract volume of Japan's US cotton exports in May increased by 68% compared with the previous week. However, China cancelled the contract in large numbers. As of May 16th, China had accumulated 37 thousand and 800 tons of US cotton and 20 thousand tons of contracts were not shipped.

The international cotton yarn market is dragged down by the Chinese market, and demand is declining. Stock is on the rise.

Under the influence of trade situation, cotton consumption is expected to continue to bear pressure, and the international cotton price weak pattern is hard to change.

According to the National Bureau of statistics, the fixed assets investment in textile industry above the scale increased by 0.8% over the same period last year, and the growth rate slowed down 1.3 percentage points compared with the same period last year. In April, the added value of textile industry increased by -1.8% compared to the same period last year, and 2.2% of the same period last year, and the operation of the textile industry has been weakened in varying degrees.

In the cotton market, according to the monitoring system data, as of May 24th, the national total sale of 6 million 88 thousand tons of seed cotton and lint cotton (yield is expected to be 6 million 105 thousand tons), accumulative sales of 4 million 220 thousand tons of lint and sales rate of 69%, a 6 percentage point slower than the same period last year, and 188.5.6 million tons of new cotton for sale.

Compared with last week, Cheng cotton futures margin decreased by about 40 thousand tons to 740 thousand tons, and the first week of the reserve cotton was about 53 thousand tons, with a turnover rate of more than 90%.

Downstream cotton yarn, cloth orders reduced, stock rose, cotton prices fell at the end of April faster than cotton yarn fall speed, in April, the total retail sales of terminal clothing shoes, needles and textiles consumer goods increased -1.1% year-on-year, the first negative growth since 2009, textile and clothing exports have been negative.

The decline in the demand for the back end of the industrial chain continues to flow upstream, which has become a major factor that has dragged down cotton prices.

Under the complex and severe external economic and trade environment, the decline of consumption is difficult to change in the short term. It is expected that domestic cotton prices will be dominated by disadvantaged operations in the short term.