The Reserve Cotton Has Been Closed For 9 Consecutive Working Days. Why Is It Going To Drop?

From December 27, 2019 to January 9, 2020, there has been no turnover in the 9 consecutive working days. In view of Xinjiang cotton's entry into the China Cotton Textile Industry Association, the investigation was conducted as follows:


Cotton Traders


The reasons for the low turnover rate of Xinjiang cotton are as follows:


1, since December 27, 2019, cotton futures prices have been higher than the maximum price of cotton reserves.


2. The water quality of the storage cotton is lower than the futures premium.


3, the quality requirements for storage and storage of cotton are more stringent than those of futures instead of delivery products. For example, the proportion of white cotton grade 1, 2 and 3 is not less than 80%, micron value is a a, B is not less than 90%, and C1 files are not included.


4. Cotton packing is required for cotton packing, and at least half of Xinjiang's cotton is bound inside this year.


5, at present, there is only one warehouse in Xinjiang and the rest are in the mainland. The storage and transportation enterprises need to transport the cotton to the mainland by themselves, and the need for two public inspection will be increased. The uncertainty of the cotton index will be increased and the enthusiasm of the traders will be reduced.


In this regard, Cotton Traders recommend:


1. After the storage of cotton in Xinjiang, the relevant responsible units will be transferred to the warehouse in the mainland.


2, cancel the two public inspection;


3, the quality of water futures reference cotton futures;


4, early release policy is expected to reduce the market speculation fever.


5, appropriate rotation of part of the outer cotton will increase the cotton reserves in the national reservoir.


Cotton spinning enterprise


Cotton spinning enterprises say that the reserve cotton wheel has a positive impact on the market, but there is also some concern:


1. In 2019, the quality of cotton will decline, and the high quality cotton will be imported into the cotton reserve, which will lead to a further reduction of high-quality cotton in the market.


2, we should pay close attention to price, guard against market speculation, cause price fluctuation and drive up cotton prices.


3. The two rounds of the public inspection of the reserve cotton wheel have caused many uncertainties in the cotton index.


Textile enterprises suggest:


1. When the new cotton is transferred into some high-quality imported cotton at the same time, the reserve cotton will continue to turn out in 2020 to realize the normalization of the storage cotton wheel.


2, we must strictly guard against "black box" operation to ensure the openness and transparency of the storage of cotton.


3. During the period of the storage of cotton, the declared Treasury can not be included in the national reserve.


In addition, the industry analysis of the reserve cotton wheel into the ceiling price is based on the Chinese cotton price index (CCIndex 3128) and China Cotton comprehensive price index (CNCotton B), but these two indexes are to the factory price, compared to the gilt factory, cotton traders "base quote", the transaction price has a serious lag, so the price of the highest price is also a certain gap with the market cotton real transaction price. Take nearly a week as an example, Zheng period broke 13500, 13800 and 14000, and the spot basis price of cotton rose sharply, while the rise of the two indexes was obviously low, which led to the rapid decline of the enthusiasm of the cotton enterprises in and outside the territory.


The turnover rate of reserve cotton fell sharply, especially after the first stage agreement reached between China and the United States. From 23 to 27 December 2019, the turnover of cotton reserves was only 1 thousand and 680 tons, with a turnover rate of less than 5%. From December 30, 2019 to January 3, 2020, the turnover of cotton reserves was zero, and the turnover rate of cotton reserves in the first week was 67.08%. As of January 3rd, the total turnover of cotton reserves was 37 thousand and 40 tons, with an average turnover rate of less than 1/4. According to the current transaction rate and the estimated time of entry, the target of storing and storing 500 thousand tons is far from being achieved. According to the insiders, after the first phase of the Sino US agreement, the pessimism of the market was partly controlled or partly reversed. This is the main reason for the low turnover rate of cotton reserves.