Reserve Cotton To Go Inventory Is Expected To Clear Cotton Prices Downward Space Is Not Large.

The main contradiction in the domestic cotton market this year is concentrated on the storage and downstream demand of cotton reserves.

We believe that the current cotton market is in the brewing stage of the last cycle and the next cycle, and the domestic cotton price is expected to show a "L" trend.

So far last year, the United States and cotton showed an overall trend of oscillation.

But the US cotton sales progress is slow. During the Spring Festival holiday, the USDA supply and demand report lowered the export volume of the US cotton and the NCC survey showed that the cotton planting intention area increased in 2016/2017. Under the influence of a series of bad factors, the US cotton fell below 60 cents to 58 cents, which conformed to our previous expectations.

In 2014/2015, the output of domestic cotton reserves was only 63 thousand and 400 tons.

There is no substantial loss, more psychological pressure.

In 2015/2016, the impact of reserve cotton on the international cotton market will be pformed from psychological level to substantive one.

Domestic large reserves of cotton to go out of stock, mainly through the reduction of new supply and improve consumption in two aspects.

On the one hand, cotton production has started, and related agencies survey shows that in 2016, domestic cotton planting intention continued to decline.

On the other hand, the increase of cotton consumption can only be achieved by reducing the price difference between domestic and foreign cotton and enhancing the competitiveness of domestic cotton yarn.

However, the downward trend of cotton prices is not unlimited. It requires two factors to consider comprehensively the pressure of financial expenditure and the competitiveness of domestic textile industry.

First, if the domestic price of cotton is too low, whether from the target price subsidy, or from the angle of the reserve cotton wheel, the low price will increase the pressure of financial expenditure.

Second, if the domestic cotton price is not low enough, the foreign cheap cotton will continue to impact the domestic market through the form of low price cotton yarn, reducing domestic cotton consumption, and is not conducive to the smooth operation of the reserve cotton destocking.

We are divided into two cases: first, if the market is short of resources, the auction involving cotton enterprises is relatively positive.

However, the textile industry is in a state of complete competition. If the price difference between domestic textiles and foreign grade products is too high, it will inhibit the demand of domestic textile enterprises for cotton, resulting in a decline in the enthusiasm of auction, and ultimately the reserve cotton will promote pactions by reducing prices.

Two, if the cotton resources in the market are not tight, there will be a situation where the auction is not active. Enterprises will replenish their raw materials through the receipt of warehouse receipts, the sale of Xinjiang cotton and the spot stock. The national cotton reserves will be sold in a disguised way by reducing prices or matching quotas.

Judging from the reserve price of reserve cotton in recent years, the price in November 2013 was 18000 yuan / ton, which dropped to 17250 yuan / ton in April 2014 (in proportion to imported cotton quotas in proportion to 3:1), and the bid price in July 2015 continued to be reduced to 13200 yuan / ton (2011 domestic cotton).

If the market does not recognize the price of reserve cotton,

The probability of continued selling is very high.

Therefore, after the strict control of cotton imports, domestic

The low point depends mainly on the competition of cotton yarn at home and abroad.

Since 2014/2015, China has strictly controlled the import quota of cotton, and the import volume of cotton has been greatly reduced.

But cotton yarn imports have no quota restrictions, and import tariffs are low.

In 2015, the cotton reserves came out from 7 to August. Given the expected reduction in cotton production and the decline in cotton imports in 2016, there was strong market expectation in the two quarter. However, the price is in step or gradually adjusted.

Cotton prices in the first half of the year are expected to show a downward trend, and cotton prices at home and abroad will reach a dynamic balance in the second half of this year.