Short Term Pressure On Cotton Is Still Hard To Rise?

Recently, domestic cotton has been rising for a long time. For example, in recent years, Zheng cotton's contract in May increased by 500-600 yuan / ton, basically standing at 11000 yuan / ton. What about stock? According to traders from Shandong, Hebei and other places, as of April 13th, Xinjiang's "double 28" picking cotton pick up offer was quoted at 11500-11600 yuan / ton (public weight, with tickets), which reached 11800 yuan / ton individually, up nearly 700 yuan / ton compared with last Monday (6 days).

Why did cotton rise? The reason for the analysis is that the agreement reached between OPEC and OPEC is a historic agreement, reducing crude oil production by 9 million 700 thousand barrels per day, the largest reduction in production in history. To stimulate the market, crude oil prices fell below 20 U.S. dollars / barrel, prices bottomed up to the current 24 U.S. dollars / barrel line.

Zheng cotton has long been out of fundamentals, especially after this year's Spring Festival. The rebound in oil prices caused Zheng cotton to rebound.

Market believes that Zheng cotton fell to 10000 yuan / ton will encounter strong support near. At present, Zheng cotton has been restored to more than 11000 yuan / ton, and spot has also been boosted, traders take the opportunity to raise prices. 13, a trader in Shandong said that the current cost of cotton upside down exceeds 1000 yuan / ton, so long as we have the chance, we will try our best to protect the price.

So, does it mean that cotton will usher in spring? I am still pessimistic. There are several reasons for this:

1, the global epidemic is still intensifying. More and more countries are closing the door. China's foreign trade is not only simply not optimistic, but also a heavy loss in its foreign trade position. Recently, many textile and clothing traders introduced that since April alone, foreign trade orders have decreased by more than 50%, and some have reached 70%-80%. More and more enterprises have "no single business to do".

2, textile mills are cutting prices and taking orders. Fierce vicious competition has led to big reshuffle and big elimination in the industry.

In April 13th, a person in charge of an enterprise in Shijiazhuang, Hebei said that the price of local yarns dropped by 500-600 yuan / ton in recent years, of which the price of air spinning OEC12S dropped to 12900 yuan / ton, and the price of combed C21S was around 18000 yuan / ton. Even so, enterprises still have no orders.

Is it going to continue production without any increase in stock or stop production? Textile enterprises face difficult choices.

3, the spring sowing work is on schedule, and it is expected that the domestic area will not be substantially reduced this year. Recently, the national development and Reform Commission and the Ministry of Finance jointly issued the announcement on improving the target price policy of cotton in Xinjiang. In 2020-2022 years, the target price of cotton in Xinjiang remained 18600 yuan / ton. Cotton growers in Xinjiang have taken a "reassurance" and increased their enthusiasm for planting cotton.

It is estimated that the cotton area or the level of Xinjiang will be maintained in 2019 this year. It is estimated that the unit yield will increase and the cost will decrease, which will be unfavorable to the cotton price in 2020.

To sum up, despite the recent rebound in cotton prices, the market is still bad. It does not support the sharp rise in cotton prices. The industry is still cautious to avoid unnecessary losses.