7-9 Month Cotton Yarn Market Trend: Cotton Yarn Or Will Take The Lead To Stabilize

Since early July, Zheng cotton has once again opened the "high platform diving" mode. The CF1909 contract has been explored from 14300 yuan / ton to 12755 yuan / ton, and then was consolidated near 13000 yuan / ton. Under the premise of no change in the fundamentals, the uncertain future of Sino US trade negotiations and the forced shift of monetary policy in various countries to the interest rate cut and loosening, there is also some shortage in the short term.

The main trend of cotton yarn futures CY2001 is exactly the same as that of cotton futures. In July, it rebounded steadily from 22485 yuan / ton to 20975 yuan / ton, which was 20515 lower than before. At present, the two sides are fighting hard in the 21200-21500 yuan / ton narrow compartment. From the recent cotton yarn futures holdings little change (1.6-1.8 million hands) and the volume of daily turnover significantly reduced (the main contract from the beginning of July to 47 thousand hands to 8 thousand and 700), confidence in the market is declining.

So how do we view the market trend of cotton yarn in 7-9? I think cotton yarn will stop and stabilize before cotton.

The first and 7-9 months are the peak season for China's textile and clothing sales, which is conducive to the rebound of yarn prices. From the survey point of view, in July, enterprises in Jiangsu, Zhejiang, Guangdong, Shandong, Henan and other places reflected that orders for bedding, denim, shirts and medium thick grey fabrics were warmed up. Enquiries and purchases of OE yarn and C10S-C32S cotton yarn began to warm up (the port's import of low import cotton yarn also obviously improved).

Second, raw material inventory of downstream weaving, clothing and other enterprises is low. In mid May, taking into account the intensification of Sino US trade friction, most cotton mills, weaving mills and garment factories took stock strategy in a timely manner, reducing raw materials and reducing the finished products. Moreover, from the feedback of enterprises, the effect of inventory clearance was obvious, so since the downstream enterprises in July, once they received orders from both inside and outside, they must replenish their raw materials.

Third, comparing domestic and foreign cotton yarn, domestic yarn still has strong competitiveness, and is still the first choice for downstream enterprises. At present, the price of Chinese made C32S yarn in Jiangsu, Zhejiang and Guangdong markets is 21500-21700 yuan / ton (using 30%-50% reserve cotton), while the price of self winding yarn in port, customs clearance, India, Pakistan and Vietnam C32S is generally 21800-22000 yuan / ton, which is higher than that of domestic yarn 200-500 yuan / ton. In addition, with the CY2001 disk price calculation, the cotton yarn period is now upside down to 1200 yuan / ton (obviously higher than cotton), so cotton yarn futures will fall ahead and stabilize in advance.