Market Analysis: Worries About Global Economic Slowdown Dragging Down Cotton Market Consumption

?

Since June, the futures price of Zhengzhou cotton has been falling continuously, and the domestic cotton price has also continued to decline. At present, the price of Zheng cotton has accelerated to below 20000 yuan / ton, which is about 2000 yuan / ton lower than that in early May. In the far months, it has continued to be weak, with obvious characteristics of near strong and far weak. The downstream raw material purchase will be more cautious, and the domestic cotton price will be significantly under pressure; It is expected that with the gradual recovery of demand such as orders at the end of the year, cotton prices are expected to stop falling and recover.

At the present stage, the domestic spot price of cotton has dropped significantly. In addition, the demand for cotton textile in the downstream is still insufficient, and the US Federal Reserve has raised interest rates substantially, which further increases the market's concern that the global economic slowdown will drag down cotton consumption. The resonance of internal and external factors leads to the continued decline of domestic cotton prices. As shown in Figure 1, the price of cotton picked by double-28 machine in Xinjiang market is tentatively quoted as 20150-20300 yuan / ton, and that of hand picked cotton is 20250-20600 yuan / ton. It is relatively high in the mainland market of RMB 20850-21600. Zheng cotton price center of gravity significantly down, cotton enterprises actively sell, point price basis resource trading volume increased, the market is worried that cotton prices still have room to fall, leading to a more cautious raw material procurement.

As of June 17, the yarn inventory of spinning enterprises in major regions of the country was 31.6 days, 0.8 days higher than last week, with a weekly increase of 2.6% and a year-on-year increase of 152.8%. In recent years, the number of days of inventory discount and inventory of textile enterprises increased, cotton futures fell sharply, manufacturers had a strong wait-and-see atmosphere, their mentality was more confused, they were more bearish on the future market, their willingness to replenish goods was weak, inventory digestion was slow, and further high base; The downstream pure cotton yarn market is weak, the inventory pressure is rising, and the market mentality is pessimistic. The overall inventory level of textile enterprises is at a high level.

With the advent of the textile off-season, downstream mills just need to replenish their warehouses. A single discussion is that the on-line production is dominated by old customers. In addition, the new crown epidemic situation has a greater impact on cotton demand. According to the seasonal law of clothing retail sales, the bottom is generally built in July to August, and the large-scale recovery begins in September. According to the current market price, most of the textile industry chain loses money, The high price of raw materials is a superficial phenomenon, while the decrease of demand is the actual situation. Only by waiting for the double forces of cost reduction and demand side recovery can cotton find an equilibrium point, and the short-term price is still difficult to stabilize.

To sum up, despite the pressure of cotton enterprises in Xinjiang, cotton demand is always weak; The price difference between domestic and foreign cotton will continue to widen, and the pattern of strong outside and weak inside will continue. With the arrival of the traditional textile off-season, the sales progress of Xinjiang cotton in 2021 / 22 is still significantly slow, which is significantly lower than that of the same period in the previous year, and the wait-and-see sentiment of downstream purchasing is warming up again. Cotton prices are expected to maintain a weak downward pattern in the short term.