Cotton: Domestic Demand And Supply Is Loose And The International Market Is Insufficient.

At present, domestic cotton market supply mainly includes new cotton,

Auction and import.

In terms of supply, there were about 300 thousand tons in the last year, and the output of new cotton was 4 million 600 thousand tons. At this stage, imports were relatively high, accounting for about 450 thousand tons in terms of 50% annual imports.

The purchase of the downstream enterprises is insufficient, mostly based on the inquiry, mainly because the early spinning enterprises have captured a certain amount of cotton through the national reserve, and individual enterprises can maintain until December, and other textile enterprises which do not have a large number of state reserve stocks are mainly buying and buying with the increase of the yarn price rising kinetic energy.

This shows that the cost side support is gradually weakening.

Recently, Zheng cotton has rebounded again after its support of 14500 yuan / ton. Its performance is still strong.

The main reason is that cotton has not yet been listed on a large scale, and the situation of supply and demand is tight. There is no fundamental change in the situation. Cotton spot is still strong because of the high cost, and the strong export of US cotton temporarily resists the pressure of supply recovery.

But we anticipate that the supporting themes will not be sustainable.

With the advent of new cotton to increase supply, domestic and international supply and demand will show a relaxed stage.

At the early stage of the listing, cotton farmers had a strong psychological price. The rush of cotton processing enterprises and traders was obvious, resulting in high cost.

Even though the average price of seed cotton purchase in the southern Xinjiang is 7.15 yuan / kg, according to the seed cotton price 2.45 yuan / kg, processing fee 1000 yuan / ton, excluding the loss, the cost of lint cotton is about 15500 yuan / ton.

When the new cotton market is limited, the cost will support the market.

But with the cotton growing gradually, the purchase price of seed cotton has begun to decline, and the attitude of cotton purchasing enterprises and textile enterprises has changed.

Demand side, as of October, the sale of new cotton is about 200 thousand tons, plus 4 months downstream demand is expected to be up to 2 million 400 thousand tons.

The state reserves will not exceed 30% of the previous year's rotation, up to 800 thousand tons.

The total supply is 5 million 350 thousand tons, and the demand is 20+240+80=340 million tons.

By the end of February, the stock was 1 million 950 thousand tons, or even higher. Supply and demand can not be said to be tight. The market is full of pressure. What we need to pay attention to is the rhythm of entering the market and its supporting effect on the short-term market.

After that, the market will enter the state cotton storage stage, and the uncertainty risk of the national reserve storage and storage time, plus the drop in storage and delivery schedule, if this year is relatively slow, the monthly supply will be around 530 thousand tons. At that time, the demand gap of about 100 thousand tons per month will need to deal with new cotton, the annual inventory balance is 1 million 350 thousand tons, and the inventory consumption ratio is less than 20%.

Early stage

Relatively strong, once support for the market, the recent US cotton exports began to slow down.

According to the US Department of agriculture, as of October 20th, the United States signed net exports of 29325 tons of Upland Cotton in 2016/2017, a decrease of 62% over the previous week, a decrease of 37% over the 4 week period, and 28826 tons of Upland Cotton in the current year, 1% lower than the previous week, and an average reduction of 21% over the last 4 weeks.

In recent years, cotton prices in India have been falling steadily, and their exports in Asia have begun to have some advantages, which partly occupy the US stage exports.

At present, the price difference between domestic cotton yarn and India cotton yarn is as high as 1000 yuan / ton, and the import of cotton yarn also has certain expectations, to a certain extent, it also occupies domestic cotton demand.

On the whole, the short-term market is still relatively strong, but it is not expected to rise. With the increase of the new cotton market, the supply and demand of the market is loose, and cotton prices are facing some adjustment. After a period of time before and after the start of the National Treasury auction, the market supply and demand is expected to be tightening up.

Operation, short-term rebound, attention before high performance, not broken, the adjustment can basically be established, the highest selling short.