The Main Differences Between The Two Are Obvious.

At present, cotton price is in the 15500 yuan / ton area as the empty warehouse receipt is overweight, it is also the competition point for many hair power, the main difference between the main and the long distance is obvious, and the cotton fluctuation is aggravated.

Cotton production in China is expected to be 6 million tons in 2018/2019.

Demand anticipation can be divided into three situations: first, the Sino US trade war has maintained the status quo, and the domestic demand for cotton is expected to reach 750-800 million tons, according to domestic demand declines 5-10% and exports decline 3-5%.

The two is the escalation of Sino US trade war, and the decline in demand is 10%, and cotton demand is expected to drop to 7 million tons.

Three, the trade war between China and the United States eased, domestic demand declined slightly, and cotton demand was expected to be 780-830 tons.

The import side is expected to be 1 million 700 thousand tons (of course, if trade war mitigation does not completely exclude the possibility of targeting US cotton, but if so, the international market will be even more scarce. According to the current import volume, the international market demand gap is 1 million 100 thousand tons).

Judging from the current dynamics of Sino US negotiations, trade wars have eased up, and supply and demand is tightening.

The risk lies in the further trend of Sino US trade war.

In addition, it is important to note that the supply and demand account does not include national reserves, which may be subjective.

However, it is considered that the main role of State Reserve non effective inventory is to stabilize the market, which may eventually limit the current market level. However, the limited production of the main producing countries will give the market potential and space for next year.

China's cotton stocks are in the same period.

As of the end of January, China's cotton social inventory of 5 million 700 thousand tons, an increase of 130 thousand tons, an increase of 1 million 150 thousand tons compared with the same period last year.

Business inventories, at the end of January, were 4 million 850 thousand tons, down 100 thousand tons, an increase of 940 thousand tons compared with the same period last year.

The high inventory status of stock still prompts sales pressure, but the pressure will not increase further. At present, cotton processing has come to an end. The monthly processing volume is about 60 thousand tons, and the monthly output is not enough.

Judging from the spot price difference and delivery pressure, Zheng cotton's 1905 contract still has advantages over 15500 yuan / ton, and there is still some pressure on the market in the short term.

At present, the price difference between inside and outside cotton is 318 yuan / ton (slip tax), the difference between cotton price inside and outside cotton is 240 yuan / ton, import has advantages, and the market begins to pay close attention to the new area at home and abroad, with a slight increase in expectation, which is a certain drag on the market.

Recently, Zheng cotton's contract spreads in 1909 and 1905 months were narrowed by about 500, and the risk free arbitrage space between them was 500 yuan / ton.

On the one hand, near the risk free arbitrage area, and the recent domestic and foreign markets to increase the area of the main producing countries in 2019/20, is also short term restraining the far month contract, resulting in the narrowing of the 1909 and 1905 month contracts. However, according to the current Sino US area expectation and the expected yield per unit year last year, the global supply and demand is expected to remain balanced and tight.

Following the shift of market concerns to sowing and growing weather, this contraction is not sustainable.

To sum up, the spot stock is on the high side of the same season, the warehouse receipt delivery and the small increase of Sino US new crop planting area is a drag and suppression on the short and medium term lines. However, the logic of the long and medium term of the national reserve low position, the tight supply and demand of the year and the trade friction mitigation make the market as a whole better.

Short term market may still be repeated at the bottom, but the long term is good.

The variable lies in the trend of trade war, which will change the short and long logic.