Zheng Cotton Stop Steady Down, Not To Catch Up And Sell.

Fundamentals have improved

Recently, the price of cotton in China and the United States has reached a new low of nearly 3 years. The new cotton year is about to open, and the fundamentals of domestic cotton will be improved.

Domestic cotton is not growing well.

In July, Xinjiang cotton entered the flowering and boll stage, and cotton in the Mainland generally entered flowering stage and flowering stage. The occurrence of pests and diseases in all cotton regions in China is relatively mild, but the overall growth rate is worse than that of last year.

According to the weighted average calculation of cotton planting area of cotton farmers surveyed, it is estimated that the total output of cotton in China will be 6 million 40 thousand tons, a decrease of 1.22% over the previous year, a decrease of 20 thousand tons compared with the previous period and a 0.5 percentage point decline. In the subregion, due to the frequent occurrence of extreme weather in spring this year, the cotton production has been delayed for about 10 days compared with the previous year. The total output of Xinjiang is expected to be flat compared with the previous year. The output of cotton in Xinjiang is flat, but it was down 13 thousand tons compared with the previous period. The drought in the mainland and the heavy rainfall affected the overall growth of cotton plants. The output of the the Yellow River River Basin and the Yangtze River Basin were all lower than the previous period. The total output of the the Yellow River basin is 476 thousand tons, down 8.19% from the same period last year, the decline is 1.44 percentage points lower than that of the previous period, and the total output of the Yangtze River Basin is 384 thousand tons, down 5.58% from the previous year, a decrease of 5.58% percentage points over the previous period, and the decline is more than 2.53 percentage points over the previous period.

As of the end of July, 68.76% of the country's cotton diseases were lighter, 9.2 percentage points lower than the same period last year, 73.62% of the lesser insect pests, 15.4 percentage points higher than the same period last year, and 43.25% of the weaker ones, an increase of 20.2 percentage points over the same period last year.

New year's cotton reserves are active

The State Grain and material reserve bureau and the Ministry of Finance issued a notice in April 23, 2019, which will carry out the rotation of cotton reserves from the national statutory working day between May 5, 2019 and September 30, 2019. The total amount will be arranged at about 1 million tons, and a balanced supply will be put in place. In principle, it will sell about 10 thousand tons per working day.

In August 19th, China reserve cotton Management Co., Ltd. plans to sell 12 thousand tons of cotton reserves, and the average price is 11916 yuan / ton, which is 173 yuan / ton lower than the previous round, and the price of 3128B is 13191 yuan / ton, which is 28 yuan / ton lower than the previous round, and the total turnover rate is 95.73% on August 19th. As of August 19th, a total of 813 thousand and 500 tons were planned to go out. The highest price was 15930 yuan / ton, and the lowest price was 11530 yuan / ton. The rotation of cotton reserves and the high turnover rate to a certain extent were negative for the recent months, but with the reduction of reserve stocks, the price of forward contracts would be supported.

National cotton industry inventories fell year on year

A sample survey of the national cotton market monitoring system showed that the average stock usage days of the enterprises surveyed by the year August were about 29.5 days (including the quantity of cotton imported to Hong Kong), which decreased by 1.9 days, down 8.1 days from the same period. Projections of the national cotton industry inventory of about 646 thousand tons, a decrease of 6.2%, a decrease of 26% over the same period last year. The cotton industry stock situation is different in the main provinces of the country. The cotton industry inventory in Jiangsu, Hubei and Hebei provinces is relatively large.

The purchasing intention survey showed that 48.8% of enterprises preparing to purchase cotton in early August were down 7.8 percentage points, down 20.8 percentage points compared with the same period last year, 45.1% of the wait-and-see attitude, 7.8 percentage points higher than the previous year, up 16.3 percentage points compared to the same period last year, 6.1% of those who did not plan to purchase cotton, and 0.1 percentage points higher than the same month, up 4.5 percentage points over the same period. At the beginning of August, 91.5% of the sampling enterprises planned to stabilize the ratio of cotton to cotton, a decrease of 1.3 percentage points, a decrease of 2.3 percentage points compared with that of the previous year, 1.2% of the enterprises intend to increase the ratio of cotton to cotton, a decrease of 1.2 percentage points, a decrease of 3.4 percentage points compared with that of the previous year, and 7.3% of the enterprises intend to reduce the ratio of cotton to cotton, up 2.5 percentage points, up 5.7 percentage points over the same period.

To sum up, the progress of Sino US economic and trade consultations is still a dark cloud covering the domestic textile industry, but the marginal effect of its impact will gradually weaken. In the new year, the domestic cotton production reduction forecast is further expanded; domestic cotton reserves are active, national storage stocks continue to slide unilaterally; and the domestic cotton industry inventory has dropped year by year. The above factors are good for Zheng cotton market. From a technical point of view, Zheng cotton in the early stage of massive slam, now stabilized, waiting for technical indicators to repair. On the operation, it is not suitable to catch up and fall.