Why Did China Sign A Contract With Us Cotton To Continuously "Brake"?

According to the USDA report, during the four weeks from October 16 to November 12, 2020, China signed a contract to import 18500 tons, 10700 tons, 705300 tons and 0 thousand tons of upland cotton from the United States in 2020 / 21 (in the same period, the shipment quantity of American cotton to China was 23500 tons, 28900 tons, 23500 tons and 30500 tons, showing a straight-line and rapid decline, and some American cotton exporters and international cotton merchants felt that there was a sharp decline Some don't understand, some are unprepared.

According to the analysis of industry insiders, on the one hand, compared with Brazil's cotton shipping and bonded goods in 2020, the increase in the basis of US cotton is obviously weaker than that of Brazilian cotton in the past more than one month, and the price difference between the two has been continuously narrowed; on the other hand, the recent sharp appreciation of RMB has made the import cost of US cotton and other imports drop visible and tangible. According to statistics, both the offshore RMB exchange rate and the middle rate of RMB against the US dollar have reached a new high since June 2018. The yuan rose more than 5500 points, or more than 8%, in 118 trading days. In addition, it is worth noting that China cancelled the 2020 / 21 annual US cotton contracts of 868600 tons and 548800 tons respectively in October 23-29 and November 6-12. Chinese buyers' sharp decline in new US cotton contracts and massive cancellation of US cotton contracts can be described as "two pronged approach", and market concerns are gradually rising.

Why in the past month, China has not only signed contracts for purchasing American cotton in 2020 / 21, but also cancelled a large number of contracts

First, under the influence of the US presidential election, the trend of Sino US relations is full of uncertainty. The implementation of the first stage trade agreement between China and the United States, and whether the ban on the extensive import of cotton in Xinjiang will be implemented at the end of November has left Chinese enterprises with a strong wait-and-see atmosphere; Second, in 2020, affected by successive hurricanes and tropical storms, the cotton production, grade and quality indicators of southeast cotton region, Dezhou and delta of the United States may be very unsatisfactory. Chinese buyers are worried about the mismatch between supply and demand of American cotton, and take measures to postpone contract signing and purchase to avoid risks; Third, from the statistical perspective of all parties, the cumulative number of US cotton imports signed by China in 2020 may be close to the end of the first phase of Sino US trade agreement. Taking into account the second and third waves of the new crown outbreak and the US cotton base difference is still relatively strong, purchasers take the initiative to "downshift and speed down"; Fourth, since late October, the spot prices of Zheng cotton and domestic cotton have fallen sharply, and the competitiveness of domestic cotton and foreign cotton after port clearance has been enhanced.