Downstream Consumption Dragged Zheng Cotton Rebound Limited

Since the beginning of this week, Zheng cotton has been in a new low for four consecutive days, which has shown a strong rise for the first time after the Sino US trade relations have deteriorated further. As of Thursday, the main 1909 contract rose to 945 yuan / ton this week. At present, there is no sign of improvement in Sino US trade relations. Downstream demand is still poor and it is difficult to improve in the short term.

USDA report neutral

In 2019/2020, the global cotton terminal inventory increased by 1 million 600 thousand packs due to an initial increase of 1 million 100 thousand packages and a 660 thousand reduction in consumption. The increase in initial inventory was due to the increase in India's production in 2018/19 and the 500 thousand reduction in consumption in China.

In June, the US agricultural report maintained that the US cotton supply and demand data were unchanged. Due to the estimated consumption reduction, China's initial cotton inventory will be increased by 750 thousand packages in the next year. This month, the US agricultural report also estimated the 500 thousand imports of cotton imports and consumption at the same time, which eventually led to an increase of 750 thousand packages in the new year's end of the year. India's cotton futures inventory increased by 350 thousand packs in the first half of the year in 2019/2020, and the cotton production and consumption remained unchanged.

In addition, India CAI expects that the cotton planting area in the northern part of India is expected to grow by 10%. Punjab and Haya Na Bong in the northern part of India completed sowing in mid May. Owing to the ideal price of cotton, the cotton planting area in the northern part of India has increased significantly this year.

Cotton sowing is basically completed, and the growth is not good.

According to the cotton farmers association of China Cotton Association's investigation of 12 provinces and municipalities in the mainland and Xinjiang autonomous region, the growth of cotton in China is in the fourth true leaf to the fifth true leaf period. According to the weighted average of cotton planting area surveyed, the cotton planting area in the whole country is 48 million 156 thousand mu, which is 1.77% less than that of the previous year.

Affected by weather, cotton seedling growth is not enough in China. The extreme weather in Xinjiang cotton area is frequent. The temperature is suddenly dropping and the illumination is insufficient. The growth is about 10 days later than in previous years. In the middle of May, the north and South Xinjiang encountered severe weather such as low temperature, rainfall and hail. Among them, the early sowing of cotton in North Xinjiang appeared rotten roots, the late sowing cotton appeared rotten seeds, and the growth of seedlings was uneven. In the the Yellow River River Basin, the cotton area is short of high temperature and the moisture content of cotton field is insufficient. Later cotton growers need to increase input of fertilizer, so as to increase cotton yield per unit area and achieve the goal of high yield.

Downstream operating rate continued to decline

According to the latest data, as of the end of May, domestic cotton business inventories remained as high as 3 million 520 thousand tons, up 970 thousand tons over the same period last year. Domestic cotton linkings fell into a slow sale. As of last week, the national sales rate was only 70.3%, down 7.9 percentage points from the same period last year, which is 18.1 percentage points lower than the past four years, of which Xinjiang sales 68.3%, down 11.2 percentage points compared to the same period last year.

After the deterioration of Sino US economic and trade relations in May, the downstream consumption of domestic cotton became weaker, the enthusiasm of raw material procurement declined, and the operating rate declined. According to the relevant data, the domestic yarn and grey fabric operating rate index has dropped to below 60, and both stocks have reached the highest level in nearly 1 years.

To sum up, Sino US economic and trade relations have not yet shown signs of improvement. The supply of raw materials in the upper reaches of the country is adequate, downstream consumption is weak and stocks are high. Later, we paid close attention to the weather, Sino US economic and trade, and the development of storage and storage. The new cotton sowing was basically completed in the whole country, and the impact of the weather on new cotton output was closely followed. The important nodes restarted in the Sino US economic and trade negotiations were closely followed by the G20 meeting at the end of the month. Recently, the rumor of storing and storing the rumors superimposed the macro surface, so that the Zheng cotton's strong rebound in the vacuum period suggested that investors should operate more short and be cautious of falling down.