Market Analysis: The Cotton Market'S Performance In The 'Golden Nine Silver Ten' Peak Season Was Less Than Expected

Since September, cotton futures prices have continued to fluctuate downward. As of yesterday's closing, 2501 contract, the main force of cotton futures, closed at 13465 yuan/ton.

The decline of cotton futures prices was mainly due to the lack of confidence in the future market. The cotton futures prices were already under pressure, which coincided with poor peripheral macro data. The data released by the US Labor Department last week showed that the number of non farm payrolls in the US increased by 142000 in August, significantly higher than the 89000 in July, but lower than the 161000 expected by the market; The unemployment rate fell slightly by 0.1 percentage point to 4.2% in that month, which was in line with expectations and the first decline in five months; New jobs fell short of expectations. The market was worried that the US labor market might cool more than expected, and the US stock market fell across the board last Friday. Affected by this, coupled with the weak fundamentals, the price of American cotton fell, dragging down the price of Zheng cotton.

The US employment related data released in early September continued to be weak, further confirming its recession logic, and cotton followed the weak trend of bulk commodities. As far as the cotton industry chain is concerned, the expectation of economic recession in the United States and the weakness of residents' consumption capacity will inhibit the issuance of domestic terminal foreign trade orders.

There are two main reasons for the fluctuation of Zheng cotton price: first, the domestic cotton supply is sufficient to make Zheng cotton price under pressure; Second, the traditional peak season of textile industry of "Golden Nine and Silver Ten" is coming, but the order increment is not significant, and the price rebound of Zheng cotton is weak.

The performance of the cotton market in the 'Golden Nine Silver Ten' peak season was less than expected, and the cotton price was weak.

On the one hand, due to the lack of terminal orders, the de stocking of the textile industry chain is not obvious. Although the month on month ratio has improved, the yarn inventory has been reduced, and the spinning profit has improved, in the early period of Zheng Mian's downward trend, Chinese textile enterprises have successively counted prices, and the raw material inventory is on the high side. At present, there is no demand for replenishment procurement, and the procurement support is weak.

On the other hand, the listing period of new flowers is approaching, and cotton farmers are less reluctant to sell under the expectation of high yield than last year. At the same time, due to the loss of the previous year, processing enterprises are cautious in purchasing. Under the current expected opening price of 5.5~6 yuan/kg, some processing enterprises choose to pre hedge some resources on the panel, and the rebound space of the panel price is reduced.

From the perspective of fundamentals, in terms of supply, the domestic supply of old crops is sufficient, and the new crops are expected to be prolific. At present, the ginning plant is not very enthusiastic about the overall acquisition, and the price expectation is closer to the futures price. In terms of demand, the demand has improved since the middle and late August. The operating rate of yarn mills and cloth mills has continued to rise, and the inventory of finished products has declined. However, the operating rate of textile mills in some regions has shown signs of decline recently, and the market lacks confidence in the sustainability of orders.

As of September 8, the excellent growth rate of American cotton was 40%, down 4 percentage points month on month, but still at a high level in the same period in recent years, 11 percentage points higher than the same period last year. Due to the continuous intensification of drought in the main cotton producing areas in the United States, the growth rate of American cotton has shown a downward trend in the near future, and the new cotton yield is expected to be less optimistic than the previous period, but it still shows a significant increase in production overall, and the supply pressure remains.

During the domestic cotton growing period (April to September), the weather in most areas of Xinjiang is favorable for the growth of new cotton. Although the domestic planting area declined slightly, the weather helped increase the per unit area yield of new cotton, making the market expect the growth of cotton output in the new season. At the same time, since September, Xinjiang's new season cotton has entered the boll setting and boll opening period, and the market's expectation of domestic high-yield has been gradually implemented.

According to the recent survey of planting areas in southern Xinjiang, the per unit yield of Bazhou and Akesu has significantly recovered from that of last year, with an increase of 10% in some production areas, and the per unit yield of Kashgar is basically the same as that of last year. It is estimated that Xinjiang's cotton output will reach 5.9 million to 6 million tons, which is in line with market expectations and will not have a great impact on the panel price. However, the recent cooling and rainfall in cotton producing areas may have some impact on cotton quality.

Looking into the future, the cotton market in the fourth quarter is anchored by the pricing of new cotton. The upper part is limited by the hedging pressure of enterprises in a cautious attitude, and the lower part is also supported by the reluctance of some ginners to sell. In the long run, the weak consumption situation is hard to change. Against the background of the general decline in agricultural product prices, the expected reduction of planting area in the next year is not strong, and the probability of cotton prices maintaining a low level of operation is high.

The new American cotton and domestic cotton products are coming on the market, and the supply pressure is increasing. The overall fundamentals are not strong, and there is still uncertainty on the macro level. It is expected that the cotton price will fluctuate in the near future, and the top is still under pressure.

The price of the main contract of cotton futures is below 14000 yuan/ton, which is at the historical bottom level. The loose supply pattern is gradually accepted and digested by the market. In the later stage, it mainly focuses on the purchase of new season seed cotton and the downstream orders of "Golden Nine Silver Ten".