How To Treat The Later Period Of Cotton Market?

Recently, there is no lack of pessimism in the market. In particular, the recent downturn in cotton prices, more oscillation. In fact, in this pessimistic cotton market, there are also some seeds of hope in the breeding, or the future market can still be expected. There are three main reasons

1、 Global cotton reduction is a high probability event. At present, cotton in the northern hemisphere has entered a critical period of growth. More than half of the cotton fields in Texas, the largest cotton producing area in the United States, continues to be dry. The U.S. Department of Agriculture estimates that cotton production in the United States will be reduced by 12% this year. Cotton planting in Pakistan has been completed, and the planting area has decreased by 1.3% year on year. According to the market forecast, the global cotton production in 2020 / 21 will be 24.86 million tons, a year-on-year decrease of 1.29 million tons, and the consumption will be 23.31 million tons, with an increase of 770 thousand tons.

From the perspective of global cotton supply and demand, the output is declining and the demand is increasing. Supply and demand may be tight, which plays a supporting role in the rise of cotton market.

2、 Domestic cotton inventory is low. According to the data, as of the first ten days of July, China's commercial inventory of cotton was about 3.239 million tons, showing a year-on-year decrease for the first time since this year. Compared with the same period of last week, the registered cotton inventory of Zhengshan decreased to 27000 tons compared with the same period of last week.

In addition, the southern region has suffered serious flooding this year, especially in Hubei, Anhui and other places, and the cotton production is expected to be seriously damaged. In the Yellow River Basin, the drought is heavy in the early stage of this year, and it is expected to be rainy in the later stage, so cotton farmers are also lack of confidence in cotton production. Therefore, it is expected that this year's domestic cotton production will be greatly reduced.

3、 Cotton prices remain low. Recently, the September contract of Zhengzhou cotton fluctuated around 12000 yuan / ton, while the price of Xinjiang cotton "double 28" machine picked cotton was around 12300 yuan / ton. From cost accounting, lint is still below the profit and loss line. After the listing of new cotton, it is estimated that the cost of Xinjiang cotton will be more than 13000 yuan / ton, which will form cost support for cotton price.

To sum up, although cotton is still depressed in the near future, with the alleviation or lifting of the epidemic situation, the cotton market will also usher in a wave of better market. When the situation is good, it must be bright after dark.