Market Analysis: Zheng Mian May Be Driven By American Cotton

During the Spring Festival holiday in China, many favorable factors were superimposed, and ICE cotton reached new highs repeatedly. After the festival, the sentiment of the domestic cotton market was driven by the external market, and Zheng Mian followed the rise, hitting a new stage high. On the domestic fundamentals, it still takes time for the textile mills to resume operation after the festival, and the sustainability of the improvement of the downstream market awaits verification.

With the sharp increase of American cotton in the festival, the import window of foreign cotton is now closed, and Zheng cotton may be higher after the festival, but its upward space still depends on the demand side. On the supply side, the processing of new flowers has come to an end. As the hedging pressure has slowed down, the panel has warmed up and the ginning plant is reluctant to sell. On the demand side, by the end of the festival, the cotton inventory of the cotton mill had been at a neutral low level in the same period of previous years. The panel reflected part of the expectation for replenishment after the festival. The cotton yarn inventory began to be accumulated in the middle of January, which corresponded to the cotton yarn inventory of the cloth mill, which had been replenished to a high level all the way and then turned to be destocked in the middle of January, but it was still at a high level in the same period, Gray fabric inventory is at a relatively high level in previous years. At present, pure cotton yarn factories have resumed production in succession. At present, 90% of enterprises have started work, but the spot delivery has not yet resumed. Affected by the rise of American cotton during the festival, enterprises are in a strong bullish mood.

As for the evolution of the market logic, the supply and demand sides are both empty and full. On the one hand, the commercial inventory is at the peak stage of the year, but the increase rate is slowing down. On the other hand, the change from the demand side is getting better. The textile mill's yarn inventory digestion is accelerating before the festival, stimulating the textile mill to supplement raw materials. After the festival, the textile mill started not so fast, but the external market rose sharply, and it is expected that the internal cotton will continue to rise slightly.

Zheng Mian may be driven by American Cotton, but the subsequent operation logic still lies in the continuity of downstream orders and the replenishment rhythm of the mill.