After China And The United States Reach A Stage Agreement, The Cotton Market Is Hard To Change.

In October 15th, a spokesman for China's Ministry of Foreign Affairs said that since 2019, Chinese enterprises have independently purchased American agricultural products in a market-oriented way according to the needs of the domestic market. It includes 20 million tons of soybeans, 700 thousand tons of pork, 700 thousand tons of sorghum, 230 thousand tons of wheat and 320 thousand tons of cotton. China will also accelerate the purchase of US agricultural products.

According to customs statistics, in 2019 1-8 months, China's total import of cotton 1 million 434 thousand and 200 tons, an increase of 46.57% over the same period, of which 22.31% of US cotton accounted for, an obvious decline compared with the same period last year.

Thanks to the positive impact of the US China Agreement and Pakistan's massive acquisition of 2019/20 cotton, the ICE futures contract returned to 63 cents / pound.

Some institutions and international cotton traders have judged that the cotton output and quality of the northern hemisphere are becoming clearer, and the space for basic speculation has been narrowed. However, external factors such as Sino US trade negotiations, Britain's desire to get rid of Europe and the increasingly complicated Middle East situation, and the Fed's interest rate cut will dominate the trend of ICE in short term, or face a wide range of oscillations and big opening markets. This is not only a test for cotton processing enterprises, exporters, international cotton traders, and cotton mills, but also a challenge for speculators and research institutions. 60-70 cents / pound will become the main battleground of Chen Bing and fierce battle.

I believe that in 2019 10-12, the global cotton market is still a big pattern of "strong external market and weak internal market". Unless the Sino US trade negotiations reach a final agreement, the two sides cancel each other's high tariffs, and China and the us turn from confrontation to win-win cooperation, ICE's phase departure from the Zheng's stage and its way of doing things can't be changed.

First, even if China continues to break the contract and abandon the purchase of 2019/20 cotton, Pakistan, Vietnam, Vietnam, Indonesia and other countries, the purchase of cotton mills and middlemen will also make the export of US cotton "a duer".

Second, China's enlargement of the probability of importing 2019/20 cotton in the United States will increase the supply pressure of high quality machine picked cotton in the world. The first stage agreement between China and the United States is clear, and China needs to import 400-500 billion US dollars of agricultural products (the total amount of exports to China's agricultural products, which is equivalent to two years to the US), although it has not set a time limit for the implementation of the contract. The import of soybeans, grains, pork and other imports is clearly unable to meet the standards. And as part of China's concession and release of goodwill and sincerity, China will resolutely complete it.

Third, the domestic annual carry over commodity cotton inventory exceeds 2 million tons, and the total output of 2019/20 is flat or even slightly increased (the national cotton monitoring system data) and the domestic cotton consumption is stagnant and stabilizing pressure (Henan, Shandong, Guangdong, Jiangsu and Zhejiang) and other small and medium-sized cotton mill feedback industry "gold nine silver ten" boom is obviously insufficient.