Market Analysis: Pay Attention To The Cotton Market Price Remains Weak Shock In The Short Term

Recently, both Zheng Mian and American Cotton have fallen into a weak and volatile trend, mainly because the two major producing countries of China and the United States have entered the market period of new cotton picking. The continuous increase in the number of new cotton on the market has put pressure on cotton prices at the supply side. In fact, the basic characteristics of the supply side in the new production season can be basically estimated stably, so the next market still needs to continue to pay attention to the performance of the demand side, At the same time, whether the macroeconomic environment can be further recovered and improved is also a question mark.

In the domestic market, the supply side is picking and listing new cotton, and the purchase price of new cotton is generally stable. At present, the cost of machine picking cotton in southern Xinjiang mostly hovers below 15000 yuan/ton, and there is no significant fluctuation. The market is also temporarily short of clear trading topics. The process of downstream demand side destocking is nearing the end, and the slow replenishment progress also shows the strong uncertainty of downstream for the future market, which is mainly due to the worries about Sino US relations and the global trade environment after the US election, and whether there will be a sustained positive policy overweight in the domestic macro after the US election is also unknown, Therefore, the sustainability of downstream demand performance is still the key. However, the rebound and maintenance of the operating rate in the lower reaches also provide temporary support for the price of Zheng Mian.

In terms of American cotton, more than half of the cotton in the new season has been harvested, but the continued dry weather in the main production areas has also led to a continuous decline in the excellent rate of cotton in this season. By the end of October, the drought degree and coverage index in the main production areas of American cotton (92.8%) were 196, 6 higher than that of the previous year and 41 higher than that of the previous week; The drought degree and coverage index of Texas (45.4%) was 235, 32 higher than that of the previous year and 34 higher than that of the previous week. USDA also lowered its estimate of American cotton production in the recent balance sheet, but the overall estimate of production increase has not changed. At the same time, the recent improvement of monthly export and sales data of American cotton on a month on month basis has also supported the demand side of American cotton.

With regard to the future market, the recent influencing factors may focus on the impact of the US election on the future international trade environment, thus affecting the global cotton price. However, the global theme will still return to the basic supply side environment after the short-term event. Whether it is Zheng Cotton or American Cotton, the price will remain weak and volatile in the short term, and the long-term trend still depends on whether the demand side can undertake the supply of this season.