It Is Still A Long Time To Open Up Cotton Stocks.

Recently, under the background of Sino US trade easing, market investors hold optimistic views on the possible agreement between China and the United States. With the rise of the market price of crude oil and other commodities, Zheng cotton price has also gone out for a month long rally. The CF1905 contract has rebounded to 15500 yuan / ton from the lowest 14650 yuan / ton at the end of December, and whether the latter market can open up a new rising market. I think we need to wait patiently in the present environment.

First, it is the impact of Sino US trade relations. Since April 2018, Sino US trade has intensified, which has greatly affected Sino US textile exports and confidence in the market investment. The price has also been hitting a new low. After the two countries' continuous efforts, the US delegation came to China for negotiations. After the meeting, the US delegation made a very friendly speech. After the meeting, the two countries made sound progress in the Sino US negotiations. However, we must soberly realize that there are variables in the two countries' trade negotiations. On the 30-31 th of January, Vice Premier Liu He of China will go to the us for Sino US trade consultation. The result of the trade will directly affect the short-term price trend of the price, but the previous price drop has basically been reflected in advance, and the drop in space is limited in the January. On the other hand, the result of the trade will directly affect the short-term price trend of the price in the United States. On the other hand, the price of the first half of the price will be reflected in the early days of April 2018. The price of the early stage of the price decline has basically been reflected in the early days of January 7th.

Second, the output of new cotton increased, the amount of imported cotton increased significantly and inventory remained at a high level.

With the reduction of the sliding rate and the depreciation of the RMB, the cost of imported cotton was further reduced. In 1-12 months of 2018, China imported cotton accumulated 1 million 570 thousand tons, an increase of 26.5% compared with the same period last year, while the average value in the past 3 years was 1 million 100 thousand tons.

At present, the processing of Xinjiang cotton is coming to an end. In recent days, the daily processing volume has basically maintained at 6000-7000 tons. As of January 23rd, the total processing of Xinjiang cotton has exceeded 5 million tons, an increase of 1.87% over the same period last year. According to this progress, Xinjiang's cotton output should be up and down 5 million 150 thousand tons a year.

Downstream demand was sluggish and inventories increased significantly. By the year December 2018, cotton business inventories were 4 million 960 thousand tons, compared with 4 million 150 thousand tons in the same period last year, and 870 thousand tons in industrial inventories, 670 thousand tons in the same period last year.

Social inventory totaled 583, reaching the highest value in the same period of history, suppressing the rebound of cotton prices.

Near the Spring Festival, most textile mills are not prepared to purchase raw materials. Recently, according to our visit to many textile factories in Henan, the enterprises generally reported that they had been on holiday in January 30th, after the seventh day of the festival, the factories in the lower reaches had already been on holiday, and the spot pactions had been reduced. Textile mills also tried their best to return the funds to ensure the smooth start of the festival.

In addition, as the downstream consumption is weak, Xinjiang cotton is very slow, and the output is expected to reach 1 million 80 thousand tons by the end of January, far below the 1 million 590 thousand tons in the same period last year.

On the whole, Sino US trade relations have eased and the market is generally optimistic, but the specific progress remains to be seen.

Due to the increase in new cotton production, the large increase in imported cotton and the large accumulation of inventories, it takes time for stock consumption.

As the futures price rebounded, the number of futures warehouse receipts continued to increase. The old warehouse receipts were slowly flowing out, and the new warehouse receipts continued to flow. At present, there are nearly 100 thousand tons of warehouse receipts in 2017/2018, and nearly 550 thousand tons of warehouse receipts in 2018/2019. There is still a big suppression on the disk, but the price has been substantially sluggish.