Ignoring The Two Advantages, Once Close To The Limit, Why Is Cotton So "Capricious"?

Recently, the United States announced the ninth batch of 200 billion dollars plus tariff products list under the product exclusion notice, which is conducive to the export of cotton products. At the same time, domestic cotton downstream market demand has improved, but yesterday, the price of main cotton contract was still close to the limit. Why does cotton price appear so abnormal in the short term? How will cotton prices continue to run in the future?

In February 19, 2020, the United States Trade Representative Office (USTR) announced the ninth batch of product exclusion notice under the list of 200 billion tariff products. This excludes a total of 47 products, including 8 textile and clothing products. In the previous exclusion, the first batch involved 2 textile tax numbers, the second batch involved 3 textile tax numbers, the third batch involved 7 textile tax numbers, fourth batches involving 3 textile tax numbers, fifth batches not containing textiles, sixth batches involving 3 textile tax numbers, the 3 batch involving the textiles tax number, the batch involving the textile tax number, and the first textile tax number excluded. The 9 batch excludes a total of 39 textile tax numbers. The excluded products will no longer be subject to a 301 tariff when they export to the United States. Exclusion period can be traced back to the date of entry into force of the 200 billion list - September 24, 2018. The validity of the excluded products listed in this notice is from September 24, 2018 to August 7, 2020.

According to the futures Daily reporters, the ninth batches of the 8 categories of textiles are described and HS codes are as follows: the first is cotton pure cotton fabrics weighing no more than 100g/m2, ranging from 43 to 68 ("cheese cloth"), three layers folded and curled, folded and curled after width less than 28cm, in line with the aerospace management service standard (5208.11.4090); two is cotton bleached and plain weave which weighs no more than 100g/m2. The quantity from 43 to 68 ("interlining") is in line with the standard of aerospace management service (5208.21.4090); three is the synthetic filament woven woven fabric (5407.92.20900) with a weight greater than 280g/m2 but not greater than 420g/m2; four is a flaky fabric containing short weight fibers of less than or equal to 85% percentage weight, mainly or only mixed with cotton, such as man-made short fibers derived from wood ( 5516.44.0022); five is non-woven fabric of poly (ethylene terephthalate two ester) (PET), the length of the film is not more than 160 centimeters by 250 cm, the weight is greater than 1800 grams / square meter, but not more than 3000 grams / square meter (5603.94.9090) six is made entirely of polyester fiber woven fabric, glued to plain cloth, the width is not more than 141 centimeters, more than 271g/m2, for decorative furniture (6001.92.001) 0); seven is bamboo made short staple knitted or crochet knitted fabrics (6003.40.6000); eight is a warp knitted fabric printed with all weights of not less than 290g/m2 but not greater than 500g/m2, all bonded to polyester woven backing cloth, used for upholstered furniture (6005.39.0080).

Cotton prices will rise and fall in the near future: new crown pneumonia in the short term, long-term demand

Huang Shanghai, a senior analyst at Changjiang futures cotton, said that in conjunction with the announcement issued by the Customs Tariff Commission of the State Council a few days ago, the tariff elimination work for us commodity marketization procurement was carried out, and cotton was also listed, which shows that the trade between China and the United States involved in cotton textile products is gradually normalized. Judging from the timing of the two bilateral policies, it means "mutual reciprocity", which means that both sides are in the first stage of the agreement signed, so that we have reason to believe that the two sides are willing to rebuild normal trade on the basis of mutual benefit.

"To the cotton market, from the demand side, orders from the United States will definitely increase, though it is difficult to restore the level before the outbreak of the trade war, but certainly better than last year, good cotton market. From the supply side, the state will encourage the purchase of the United States cotton, on the one hand, the active purchase of market players, on the other hand, the national cotton store may directly enter the United States cotton. The active procurement of market players has little impact on the market, but it is only a stock change in imports from other countries to the United States. If the direct entry of national cotton into the US cotton is likely to be directly replenish the national reserve stock, the realization of the national storage cotton net entry will actually increase global demand, reduce supply and directly benefit cotton prices. Huang Shanghai said, of course, the main contradiction between the trend of cotton prices is not Sino US trade relations, but the beginning of the gradual spread to the new crown pneumonia epidemic abroad. After 1 months or so, China has gradually controlled the spread of the epidemic. However, the explosive growth of South Korea's diagnostic data last weekend has cast a shadow over the global epidemic control. The Chinese government can use the unparalleled macroeconomic regulation and control capability to basically control the epidemic situation in a short time. The governments of other countries do not have such a large control over the economy and society. If the outbreak occurs, the consequences will be unthinkable. Therefore, although the current domestic starts to start gradually, it should not be taken lightly. We still need to reserve some prudent attitude towards the cotton price trend.

Ren Xinpu, vice president of Yongan futures Beijing Research Institute, told reporters that the 8 textile tariff numbers involved in the product announcement of the ninth batch of US $200 billion plus tariff products list basically belong to the non mainstream varieties exported to the US textile structure. The tariff exclude list covers two cotton products, one is cotton pure cotton fabric whose weight is not more than 100g/m2, and the other two are cotton bleached, plain woven fabrics whose weight is not more than 100g/m2, and most of them are chemical fiber products. From the point of view of China's export of American textile structure in 2019, it mainly includes 120 billion 290 million US dollars of textiles and 1 billion 590 million cotton yarn. Export fabric is US $60 billion 80 million, of which cotton cloth is US $12 billion 460 million. Export clothing is US $151 billion 590 million. Excluding the products from the first batch to the ninth batch, we mainly cover some non cotton, polyester, polyester or blended fabrics, while the textiles and garments that occupy the largest proportion are not reflected in the exclusion list.

"Only responding to the elimination of tax cuts by China's commodities to the US, the future of China's export to the US textile and clothing industry needs effective action to improve it. Under the current market situation, our orders are greatly affected by occasional epidemic factors. We need to do enough work in the post epidemic period. We should pay attention to create appropriate publicity and image environment, give full play to China's industrial chain supporting advantages and strive for our market share. Ren Xinpu said that the urgent task at present is to stabilize market expectations, resume production steadily, restore logistics and transportation steadily, and expand international market on the basis of efforts to restore domestic orders. We should seize the advantages of the implementation period of the active fiscal policy, do a good job in the extension of the policy of planting and purchasing and storage in the later stage, and promote the revitalization of the industry with the rationalization of the relationship between the upstream and downstream industries of the industrial chain. He reminded the industry sides to recognize the supporting advantages of China's textile industry chain, recognize the cyclical characteristics of industrial development, and avoid the adverse situation of "low price out" and "peak clearing".

Ningbo cotton importer Lao Zhang told reporters that the Sino US trade relations are becoming more and more normal, coupled with the market anticipation that the number of imports of US agricultural products in China will increase again on the basis of 2017. It can be considered that the number of imported cotton will be larger in the future, which will have negative impact on domestic cotton prices, and at the same time will have a great impact on the United States and cotton. There are more choices.

Zhou Wenke, assistant general manager of the earth futures and manager of R & D department, said that in the long run, the United States will not impose a 301 tariff on the products under the 39 textile tariff. Although the prevention and control of new crown pneumonia in China is improving gradually, the global epidemic prevention and control is not optimistic. In the short term, the logistics barrier caused by the epidemic has a greater impact on the market demand, making the short trend of the market conceal the positive effect that the United States no longer impose 301 tariffs on the 39 kinds of textiles.

Some industry professionals believe that the current domestic and foreign cotton market needs to focus on the following issues: first, the evolution of domestic and foreign epidemic situation and the effect of prevention and control. The two is the start up of downstream enterprises and the quantity of raw materials purchased after the gradual improvement of the epidemic situation; the three is the evolution of the price difference between domestic and foreign cotton market and yarn Market; the four is the expected change of cotton planting at home and abroad in the new season, especially the progress of cotton planting in Xinjiang area.

Xinjiang's new cotton area is expected to decrease, and raw material inventory of textile enterprises will be reduced.

Yesterday, the State Council held a press conference on coordinating epidemic prevention and control and economic and social development. The national development and Reform Commission said at the meeting that the current enterprises have made positive progress in resuming work and resuming production. Large enterprises have made progress faster than those of small and medium-sized enterprises, and the upstream industry and capital technology intensive enterprises are faster than downstream industries and labor-intensive enterprises. The rate of resumption of Industrial Enterprises above designated size has gradually increased, of which Zhejiang has exceeded 90%, and Jiangsu, Shandong, Fujian, Liaoning, Guangdong and Jiangxi have exceeded 70%. From the key industries, the iron and steel enterprises reemployment rate is 67.4%, and the non-ferrous metal enterprises recovery rate is 86.3%. In particular, enterprises in key areas related to the national economy and the people's livelihood are accelerating the resumption of production and rehabilitation. Related enterprises are working overtime and producing at full capacity. The utilization rate of the mask enterprises has reached 110%, and the yield of the national grain emergency processing capacity has exceeded 70%, the capacity recovery rate of the coal mine has reached 76%, and the number of railway loading has recovered to about 95% of the normal level before the civil aviation. Regular operation.

According to the reporter's understanding, Xinjiang's spring ploughing and preparation work has been carried out orderly from south to north. The South Xinjiang region has quickly started the production of small arch shed for farmers' courtyards and the "spring early production" of the field arches, so as to speed up the rush to grow fast-growing vegetables, shorten the production cycle, and increase the market supply during the epidemic prevention and control period. At the same time, according to the latest agricultural scheduling, the crop planting area of 70 million 642 thousand and 900 acres in the region has been steadily decreasing compared with last year. The planting structure showed wheat reduction, cotton reduction, maize growth, vegetable growth, and "two minus three growth trend" of characteristic crops.

Judging from the current situation of the domestic textile industry, it is expected that domestic and foreign cotton prices will still face downward pressure in the short term. Due to the limited flow of population, some textile enterprises will delay their return to work in the domestic market, which will have a certain impact on the export and domestic sales of textile and clothing in the short term. Affected by worries, it is difficult to get rid of the downward trend of cotton prices in the short term, and the subsequent trend depends on the control of the epidemic situation. In the international market, China is the largest cotton consuming country in the world. Considering the reaction of domestic and foreign markets since the outbreak of the epidemic, the phased demand of cotton will be affected. In addition, the raw material inventory of textile enterprises has declined, textile production has decreased, yarn inventory has increased, and cloth inventory has increased slightly.