Zheng Cotton Predicament Brewing Up Opportunities Later Easy To Rise Or Fall

The gap between production and demand remains.

Last week, Zheng cotton's capital inflow was obvious, the main contract broke through 16000 yuan / ton, but eventually the pressure dropped.

From the recent trading in the market, Zheng cotton has a breakthrough impulse, but the fundamentals have not improved significantly over the previous period, the reserve cotton throwing and storage policy has not yet landed, so Zheng cotton does not have the conditions to break upward, the opportunity still needs to wait.

Downstream demand weakened

Market expectations of the "three silver four" market, the overall consumption is less than expected.

If the downstream consumption is not satisfactory in March, consumption will be weakened again in April.

Orders for most textile enterprises in the lower reaches of the United States improved in March, and cotton mill operating rates also showed an increasing trend, despite a slight increase in inventories.

In April, the cotton mill started to operate at a steady rate, and maintained its 64.8% level, but its stock continued to increase. It has increased to 18.4 days as of last week, more than 1.7 days in the same period last month.

At the same time, the starting rate of grey fabric has changed from an increase in March to a slight decline in recent days, but stock has increased slightly.

From the start and inventory of the lower reaches, consumption shows a weak signal after the Qingming Festival.

Supply pressure increased

By the end of last week, new cotton processing in the country totaled about 5 million 300 thousand tons, a slight increase over the same period last year.

According to the data, in the end of August 2018, domestic cotton business inventories were 1 million 630 thousand tons, plus 380 thousand tons of dumping in September. That is to say, at the beginning of this year, the domestic stock of the old ones was about 2 million 10 thousand tons, which increased by 450 thousand tons compared with the same period last year.

As of February, 1 million 110 thousand tons of cotton were imported this year, a significant increase of 540 thousand tons over the same period last year.

In addition, the information that the national reservoir has accumulated 270 thousand tons of cotton in 2018 is still unclear.

From the total calculation, as of now, domestic cotton supply has increased by 720 thousand tons over the same period last year.

The increase in tradable stock and trade friction between China and the United States eventually led to the slow progress of domestic cotton sales and the increase in domestic commercial inventories compared with the previous year.

As of April 4th, the national sales rate was 59.8%, down 0.6 percentage points from the same period last year, which is 8.6 percentage points lower than the average in the past 4 years.

As of the end of March, domestic cotton business inventories of 4 million 160 thousand tons, an increase of 930 thousand tons over the same period.

Cheap cotton is tight.

Domestic cotton business inventory data show that by the end of March, the proportion of Xinjiang cotton in commercial inventories was 80%, up 5 percentage points, the highest in recent years.

From the sales progress, Xinjiang cotton sales progress is only 58.3%, down 2.5 percentage points from the same period last year, significantly lower than the average level.

It can be seen that the sale of real estate cotton is better than Xinjiang cotton this year. This is also confirmed by our field research and understanding.

In addition, cheap imported cotton is also favored by the market.

As part of the imported cotton has higher cost performance compared with Xinjiang cotton, the mainland is also more flexible in picking up goods, and the market has increased demand for this part of imported cotton.

At this point in 2018, the reserve cotton had begun to be put into the market, and there is still no clear report on the storage of cotton this year, and the market lacks the medium and low quality cotton resources.

Underside support is obvious.

After successful inventory, domestic cotton reserves have dropped to about 2 million 760 thousand tons, but according to the US Department of agriculture report, the cotton production and demand gap in China has averaged 3 million tons in the past 4 years.

In the past, there was a large number of cotton reserve stocks in the past, the gap is difficult to play a supporting role in domestic cotton prices, and now the domestic reserve stocks have dropped to normal level, the support role of the gap will be very obvious, especially at present, there is no reserve cotton rotation and no import cotton quota increase.

At the same time, the United States and India have also played a supporting role in domestic cotton prices to a certain extent.

Recently, the US cotton sales data are strong, coupled with optimistic macro data and good expectations of Sino US trade negotiations, the US cotton performance is eye-catching, and India wants to raise the MSP price of the next year, which will undoubtedly play a strong supporting role in domestic and foreign cotton prices.

On the whole, downstream demand is weak, cotton yarn processing profit has declined year by year, raw material procurement enthusiasm is not high, and mining along with usage is more common; cotton business inventories increase year by year, import cotton port inventory level is high, throwing storage is expected to supply pressure is bigger; exchange data show that zhengmian warehouse receipt has increased again after a small amount of outflow in March, now has reached 690 thousand tons.

At present, although the domestic dumping policy is not clear and Sino US trade negotiations fail, Zheng cotton has no obvious trend, but with the new cotton planting in succession and the weather speculation gradually entering the field of vision, under the support of long-term production and demand gap, Zheng cotton's later stage is easy to rise and fall.