Macro Pressure Surge Zheng Cotton Disk Touched At The Beginning Of The Limit

Affected by crude oil slump yesterday evening, today's market opened 2 minutes, Zheng cotton hit the limit board. In the early stage, the main contract of Zhengzhou cotton was weakened by the pressure of macro pressure and loose supply and demand, but it continued to be weak. However, due to the lack of support factors in the short term, it was characterized by concussion and weakness. During the period, it was mainly boosted by the favorable news of Sino US economic and trade consultations. At present, the global economic slowdown is obvious, the expansion of international trade disputes, the impact of cotton demand, the supply of global cotton production prospects preferences, cotton supply and demand in a relaxed environment of cotton prices are difficult to increase. Domestically, lint inventory is at a high level for nearly six years, and new flower will start listing in September, and supply pressure is expected to continue. Domestic cotton textile industry chain products demand is weak in every link, slow delivery of grey cloth, and the accumulation of inventory makes the industrial chain being obstructed, and the demand of lint cotton is restrained.

The growth of US cotton is much better than that of the same period last year. Export performance is not ideal, especially in China. According to the US Department of agriculture's export sales report, on the 19-25 day (week) of July, the export sales of Upland Cotton in 2018/19 increased by 10 thousand and 200 packs, a decrease of 94% from the previous week, a decrease of 90% compared with that of the previous four weeks, of which 5400 packages were reduced to China's export sales, and the 364 thousand and 800 increase in the export sales of land cotton in 2019/20. In 2018/19, as of 25 July, the US cotton total sales of 15 million 543 thousand packages, representing a decrease of about 5% compared with the same period last year, and the US cotton shipment progress was the lowest in the last 6 years. 2018/19 cotton shipments to China were significantly lower than the same period last year.

The latest cotton price in India is higher than that in the same period last year and 5 years. As of July 26th, the newly planted cotton in India was 10 million 895 thousand hectares, 643 thousand hectares higher than the same period last year, and 636 thousand hectares higher than the average in the past 5 years. Cotton production decreased in India last year, and this year the yield will probably increase. USDA's latest supply and demand report in July will estimate the new cotton output in India by 500 thousand packs compared with the previous report, and the report is expected to increase output by 2 million 500 thousand packs over the previous year.

Domestic lint stocks were higher year-on-year. As of the end of June, domestic cotton business inventories were 3 million 339 thousand and 200 tons, a decrease of 188 thousand and 900 tons, a year-on-year increase of 1 million 81 thousand and 800 tons, an industrial inventory of 688 thousand tons, a decrease of 63 thousand and 600 tons, a decrease of 139 thousand and 600 tons compared with the same period last year. Reserve cotton auction business heat slightly lower, the average price continued to shock downward trend. As of August 1st, from the start of this year, a total of 608 thousand and 300 tons of cotton wheels were sold, with a turnover rate of 88.72%.

The price of staple fiber is weakening, and the price difference between cotton and polyester continues to improve. As of August 1st, the price of PET staple decreased by 1250 yuan / tonne compared with the same period last month, and the price difference between cotton and polyester was 6715 yuan / ton, up 1126 yuan / ton from the same month last month. Warehouse receipts outflow faster, effective forecasts have increased. As of August 1st, the number of warehouse receipts in Zheng cotton market was 13629, a decrease of 2819 pieces in the same period last month, with an effective forecast of 1258, which is 670 higher than that in July 15th.

Domestic and foreign cotton market will continue to supply more than needed. The domestic lint inventory is higher than that of the previous year. The pressure on the downstream products of the domestic textile industry chain is still large, the industrial chain is not well conducted, and the cotton enterprises' enthusiasm for purchasing lint is not high. The price advantage of substitute staple fiber is enhanced. Zheng cotton market still has hedging pressure. In addition, the domestic cotton business is approaching the end of the year, and cotton enterprises are facing financial pressure. Overall, the pressure on cotton market is still large.