After The Holidays, Rain Or Cotton Can Be Lowered.

During the Spring Festival, the market finally came to the US Department of agriculture's report. This report has made a sharp negative adjustment to the data gold of the world and individual countries. In addition, just after the domestic holidays, the downstream operation has not yet been restored, and the demand is light. The main 1905 contract is down to 15000 yuan / ton below.

Up to the end of the world cotton inventory forecast

Compared with last December, the latest US agricultural report increased the estimated 600 thousand packages of the world's cotton stocks at the beginning of the year, and at the same time sharply reduced the global cotton consumption by 1 million 990 thousand packages, which eventually led to an increase of 2 million 310 thousand packages in the final inventory estimate. The reduction in consumption forecasts was mainly caused by China and India, and their consumption forecasts were cut by 1 million and 500 thousand packages respectively.

In terms of output, the USDA report in February reduced the world's cotton production by 290 thousand packages. Among them, Brazil and China's output forecast increased by 500 thousand packages, while Turkey, India and the US production forecast were cut by 600 thousand, 500 thousand and 200 thousand respectively.

China's cotton consumption forecast is down

China's cotton inventory is coming to an end. Due to the large gap between production and demand in China, the import of cotton is bound to increase. In view of this, the US agricultural report increased 500 thousand cotton imports in February. The Sino US trade frictions have had a negative impact on China's downstream consumption in the past few months, and the impact is already irreversible. This month, the US agricultural report sharply reduced China's cotton consumption by 1 million packages. Eventually, the final inventory estimate was increased by 2 million more than the previous US agricultural report.

Us slightly adjusted, India end inventory forecast increase

The US and India have slightly adjusted the supply and demand data this month compared with the adjustment of the US agricultural supply and demand data. In the US, the output is estimated to be reduced by 200 thousand packages, the consumption estimate is slightly reduced by 100 thousand packets, and the final inventory estimate is down by 100 thousand packets, keeping other data unchanged. On the India side, in February, the US agricultural report increased the estimated 550 thousand packages of cotton stocks in the early days of India, and at the same time reduced production and consumption by 500 thousand packages, which eventually led to an increase of 530 thousand packages in the final inventory estimate.

The signal of Zheng cotton's release during the Sino US negotiation period

Whenever China and the United States negotiate time, whether it is up or down, Zheng cotton will respond ahead of schedule. The performance in the past two days is a bit puzzled by the fact that the outcome of the negotiations is expected to be better. Zheng cotton may pull up another wave, but its plain reaction is really intriguing.

As early as December 1, 2018, the heads of state of China and the United States met in Argentina, and the two sides agreed to resolve bilateral economic and trade conflicts in the next 90 days. The talks released positive signals and achieved some results. The two countries declared a cease-fire for 90 days, indicating that the two sides are willing to continue in-depth negotiations on trade issues. Affected by this news, Zheng cotton responded ahead of schedule. The main contract of CF1905 rose directly from the lowest point of 14980 yuan / tonne in November 30th to 15525 yuan / ton in December 3rd, reaching a 3.6% increase in just two trading days. It can be seen that the positive results of Sino US trade negotiations will have a great impact on cotton prices. Of course, as the negotiation time continues to postpone, Zheng cotton finally returns to the downward trend.

On the 7-8 th of January 2019, China and the United States held a second ministerial trade talks in Beijing again, and continued to seek to end trade disputes between the two sides. Perhaps it is because of the optimistic expectation of the negotiations, Zheng cotton has seen another wave of gains. From the diagram, the duration and height of the rise are higher than the last one.

Then, in January 30, 2019, China and the United States continued to launch a new round of higher level talks. The rounds and rounds of negotiations were very tight. From the feedback of Zheng cotton, there were also some ups and down. Although the process was not smooth, there was still a climbing pattern. From here we seem to be able to conclude that cotton prices will rise as long as there is a positive signal in the Sino US negotiations.

However, with the advance of the 14-15 day negotiations in February, Zheng cotton not only failed to advance in advance, but fell earlier, with a drop of several hundred points, although the day of the negotiations rose slightly, but far less than expected. Perhaps the market reaction to the Sino US negotiations has been exhausted, perhaps the market does not have too much hope for the outcome of the negotiations. In short, Zheng cotton's response is very dull, perhaps not too much hope for the negotiations. And from the US Party's release, it is likely that the later sides will continue to negotiate, and the additional tariff time may be postponed. Perhaps this is the inspiration from Zheng cotton's "vane".

On Friday, Zheng cotton market continued the trend of turbulence. The 1905 contract of the main day was down 30 yuan to 15005 yuan / ton compared with the previous day, and the turnover continued to decrease by 26276 to 124 thousand hands compared with the previous day. The turnover volume decreased by 39626 to 15.2 hands throughout the day. The total position was reduced by 776 to 598 thousand hands, and the turnover rate was only 25.35%. In the absence of financial support, Zheng cotton is difficult to pick up, continue to shock market. According to Xinhua news agency, China and the United States reached a principled consensus on major issues in Beijing's trade negotiations. The two sides conscientiously implement the consensus of the two heads of state of the Argentina meeting, and have conducted in-depth exchanges on issues of common concern, such as technology transfer, intellectual property protection, non-tariff barriers, service industries, agriculture and trade balance. The two sides agreed to continue consultations in Washington next week. U.S. President Trump reiterated on Friday that he may extend the deadline for reaching an agreement with China in March 1st and will not raise tariffs on Chinese goods. Against this background, the rising probability of Zheng cotton market in the long cycle exists, and it is suggested that the customers can bargain down. As of February 15th, Zhenggang warehouse receipt was 17223, registered tonnage of 740 thousand tons, and the number of forecasts increased by 1798. The total registered tonnage of Zheng cotton will reach 817 thousand and 900 tons, which will reach a new high. Under the pressure of warehouse receipts, speculative customers can do more in the short term, but pay attention to the pressure level of 15400 yuan / ton.

Prediction of lint market after Spring Festival

After the Spring Festival, the lint market has not yet been restored, and the number of salesmen in the territory is relatively low. The stock in the mainland is relatively adequate, the purchase and sale is postponed, and the price of lint is stable. The downstream operation rate has obviously recovered, but it is still in a semi vacation state. According to the data, the yarn load index of China is only 46.3, while the grey fabric load index is lower, which is 32.2.

It is expected that with the resumption of downstream construction and the consumption of raw materials, the purchase and sale of lint is expected to become more active, and investors will be able to intervene more often. However, subject to huge warehouse pressure and commercial inventories, it is expected that Zheng cotton will not increase significantly in the short term. It is important to note that China and the United States are conducting trade negotiations. The result is crucial and investors need to pay close attention to it.