Sino US Trade Talks Are Progresses Well, And Cotton Prices Are Expected To Regain Strength After The Holidays.

Since last September, the CY:C32S index reflecting the market price of cotton yarn has been dropping from 24330 yuan / ton to the current 23130 yuan / ton, with a total decrease of 1200 yuan / ton, although the drop is not big, but the drop time is longer, and the whole industry chain is full of pessimism.

From the cost point of view, there is little room for cotton to continue to descend; from the demand side, the prospects for Sino US trade negotiations are more optimistic, and demand for post holidays is expected to recover at a stage, and the price of cotton yarn is expected to rebound.

Cotton prices remain stable

From a fundamental point of view, in July and August of last year, cotton production in the main cotton producing countries decreased significantly since September and October.

According to USDA data, the United States is affected by hurricanes, and its output has been reduced to 500 thousand tons. China's output in Xinjiang is less than expected, and its total output has been reduced by 100 thousand tons. India's output has been reduced by 400 thousand tons under the influence of insect pests. Although Brazil's output has been raised, its total output has dropped by nearly 1 million 100 thousand tons compared with the previous year.

Therefore, the supply side of cotton actually has many advantages.

Cotton prices continue to down at home and abroad, mainly because of worries about demand side.

On the one hand, the global macro-economic downturn in 2018 was obvious, and the real economy was weak, which led to a decline in downstream demand and stockpile demand; on the other hand, foreign trade orders were significantly reduced.

Whether USDA or domestic related agencies are cutting cotton demand, but the number of specific downgrades is difficult to determine.

At present, domestic cotton prices have been significantly lower than this year's cost of cotton ginning. At the same time, due to the smooth storage of national reserves, domestic cotton supply and demand situation is not excessive in the long run.

Therefore, even if future expectations are more pessimistic, the bottom of the market will remain strong before it is expected to be verified.

Optimistic outlook for Sino US trade negotiations

At present, Sino US trade negotiations are progressing well.

In January 9th, the fifth round of Sino US trade negotiations ended; in January 10th, the Ministry of Commerce and the office of the United States trade representative issued a public statement.

The Sino US talks have more positive signals, and the market has also responded positively.

Next, the two sides will continue to work together to push forward the consultations as planned, and the Sino US negotiations at a higher level will be held at the Davos forum at the end of this month.

The situation in the whole trade negotiation is changing to the right direction.

As the top two economies in the world, it is necessary and win-win to have their own comparative advantages and strengthen bilateral trade cooperation.

Under the premise of seeking common ground while reserving differences, the normal economic and trade may continue, and other trade disputes involving the core contradictions of the two sides are individually negotiated.

If such a result is achieved, the export of cotton textile industry will resume and the downstream demand will be warmer.

Cotton yarn industry chain performance is weak

Because of the poor production and operation of downstream enterprises, cotton yarn enterprises are also facing greater pressure.

Although the price of cotton yarn has dropped, cotton prices have fallen even more, but the company has a good profit in processing the disc, but the sales are not smooth, and the stock of yarn is backlog.

Affected by this, a number of small and medium-sized textile enterprises have been on holiday in advance, 10 days ahead of schedule.

Because of weak market demand and impaired confidence, textile enterprises' cotton stocks are also kept low, and the enthusiasm of replenishment is low.

On the whole, the cotton industry is facing the problem of insufficient demand, and the price is more sluggish.

However, due to the good direction of Sino US trade negotiations and the obvious cost support of upstream cotton, the downward space and probability of cotton yarn prices have obviously decreased.

After the Spring Festival is often the peak season for textile industry. If trade negotiations can make better progress and demand will be activated, the price of cotton yarn is expected to reverse and decline for a long time and become stronger again.