The Logic Of Zheng Cotton Plummeting And Suggestions For Follow-Up Operation

On 7 July, the US cotton crop growth report showed that the rate of excellence was higher than ever. And since the G20 summit, China and the United States entered a vacuum period. The US Department of Commerce said last week that it would raise taxes on Vietnam's steel products. The worries of global economic growth worried investors' demand. The US cotton market fell sharply yesterday evening, and after the opening of Tuesday, Zheng cotton also started to decline. Behind this wave of decline is fundamental support, but in time it is earlier than we expected.

In 18/19, domestic carry over inventory increased substantially compared with the same period last year.

From the perspective of the market performance ratio, because of the obvious cost performance of the State Reserve, the textile mills and traders cherish the final dumping bonus. Even in the context of trade war and passive inventory, the national cotton store's turnover is still good. It is estimated that during the 19 years of dumping and storage, the cotton reserve volume will be about 900 thousand tons, and the national reserve stock will remain 1 million 850 thousand tons. Domestic supply is adequate in 18/19, and the annual output + import and consumption surplus is estimated at 50-80 tons. The domestic circulation at the end of the year has been greatly improved. In the early July, 1 million 400 thousand tons of new cotton were not sold, and the Xinjiang cotton which was not sold at the end of August was under pressure to put pressure on the market. In early July, the warehouse warehouse futures warehouse and effective forecast were nearly 680 thousand tons. At the end of the year, the carry over inventory increased substantially compared with the same period last year. The digestion of large quantities of warehouse receipts under the high and low cotton prices first needs to knock down the import profits and reduce the incremental supply. The 9-1 price difference maintains the reverse pattern, and the actual and speculative consumption is improved. If the support period is not supported, the price will be faced with a sharp pullback pressure.

(USDA7) the monthly report is expected to be empty in 19/20.

According to USDA6 monthly report, global cotton output in 18/19 is basically determined, while consumption in 18/19 is facing a pressure of callback. Judging from recent performance, shipments of US cotton are obviously less than expected, and export expectations for 18/19 are down. India spinning profits are in a state of continuous loss for nearly 1 months. Vietnam's spinning basically has no profit, and its buying of US cotton has obviously weakened. India, Vietnam and China's consumption in are facing a pressure of callback.

In the year of 19/20, the global production is expected to increase in addition to China. It is estimated that the global cotton production will increase significantly in, and the harvest area and unit production will increase simultaneously. The marginal increase of the area will be larger than the increase per unit area and the marginal volume. The global supply and demand of cotton will be basically balanced. Besides the Chinese production, the world needs more than 2 million 830 thousand tons, and the whole ball will continue to increase in addition to China. At present, the cotton planting area in the United States is basically determined and its growth is in good condition. India's MSP policy supports the growth of cotton growing area. At present, the support for increasing production is expected, and the subsequent supply variables are in the weather. The 19/20 year's year-on-year growth of 2.4% consumption needs a question mark.

On the whole, the short-term market can not see the signal that consumption has obviously improved. Following the attention to weather, China and the United States enter the vacuum period, the macro variables are repeated. Unilateral short term does not recommend operation. It seems to be a better choice to make the difference between inside and outside cotton price and the 9-1 counter set.