What Will Be The New Market For Cotton Yarn Futures?

This week officially entered the "golden three silver four" stage, the downstream market recovered, the procurement increased significantly. As of March 7th, the average price of domestic C32S was 23062 yuan / ton, up 25 yuan / ton last week, and the price was small. According to the front-line staff, local sales of cotton yarn market are dominated by small orders.

Judging from the upstream cotton raw materials, unlike cotton yarn slightly warming trend, cotton city continues to focus on concussion in the near future. At present, authoritative organizations have begun to release the supply and demand forecast in 19/20, and the USDA forecast is 8 million 992 thousand tons (8 million 818 thousand tons last year). Under normal circumstances, with the economic growth rate down (at the two sessions, when Premier Li made the government work report, it is expected that the domestic economic growth rate will fall to 6-6.5% in 19 years), and cotton consumption will decline correspondingly. But at the same time, the easing of trade friction between China and the United States, coupled with the increase in cotton import quotas and the increase in cotton consumption, on the other hand, the government is relaxing monetary policy, reducing taxes and lowering fees and other measures in the near future, so that people will have plenty of money, so as to increase clothing purchase and feed back to upstream gradually, thus improving domestic cotton consumption. Therefore, domestic cotton consumption in 19/20 may not be pessimistic. At the same time, considering that there is not much room for increase in output, domestic cotton inventory is expected to continue to decline, which will give domestic cotton and cotton yarn price support.

From the recent sales situation, the downstream cotton fabric market has increased significantly, and shipments have been speeded up. As of March 7th, the total grey fabric CG C32 was charged at 5.59 yuan / meter, and the price was stable. At the same time, the market has sufficient supply of conventional varieties, and the volume is large. The current order of the weaving mill can be maintained until the end of March. Large textile factories can maintain a balance of production and marketing, and the inventory level has been released more than a year ago.

As of March 7th, the spot price of FCY Index C32S was 22904 yuan / ton, maintaining a slight increase. The biggest impact on foreign yarn this week is that the government's work report of the two sessions clearly reduced the value added tax to 16% of the manufacturing industry to 13%. This news will make the imported yarn much better in the short term. By then, the cost of the internal disk will be reduced by 300-700 yuan under the premise that the unit price of the foreign exchange is unchanged. In the short term, compared with domestic textile enterprises, traders adjust prices more flexibly, and profit margins will increase to a certain extent. But since it is "cake" out of thin air, it is bound to be "shared" by some people, not to mention that the price of the downstream buyers is lower than that of foreign exporters. At that time, the benefits of the 3% value-added tax will be shared by three parties. On the other hand, in the long run, the price reduction of domestic industry chain brought by tax reduction is more abundant, even more than imported yarn, and traders have no significant price advantage. And the cost of domestic textile enterprises has declined, but foreign textile enterprises have no cost gains. Therefore, although import orders may increase in the short term, the price advantage of imported yarns will decrease in the long run compared with domestic yarn, and the competitiveness of domestic yarns will increase in the international market and profits will be exported.

Cotton yarn futures industry has changed considerably this week. In March 4th, Zhengshang announced the cotton yarn futures business rules amendment. After the revision, the cotton yarn futures could significantly expand the capacity of the deliveries, and originally only the factory library delivery, now increased the warehouse delivery, and increased the factory and warehouse delivery in Hubei and Hebei areas, making the participants a substantial increase. On the other hand, the revision also revised the original substitute and the water level standard, and increased the standard of premium. Originally, many production banks wanted to get close to the minimum production of benchmark deliveries when producing cotton yarns. However, due to unreasonable indicators, the spinning enterprises could not meet other targets while meeting certain targets, so the factory storehouse could not control the cost very well. Therefore, the enthusiasm for participation was not high, and the downstream confidence in the quality of cotton yarn produced by spinning enterprises was also low. The amendment will start in the CY1910 contract. As a result of the news, the 1910 contract increased, and the price dropped sharply once the expected registered warehouse receipts increased. It is expected that the cotton yarn futures activity will continue to improve under the condition that the cotton yarn futures business rules are further improved.

Finally, let's wake up. Recently, everyone feels that the Sino US trade problem has been better and better for China's textile industry, but it must be noted that the so-called tariff extension is not a tariff cancellation. It is only temporary action that the US side postponed the import tariffs of 200 billion US dollars. The key lies in whether China and the United States can make substantial progress in the "buffer period". From the current situation, the US side is more inclined to impose tariffs as a sword of Damour and Chris, and the initiative is still in the hands of the United States. Exports to textiles, clothing and other products have only been a short period of positive interest. Extroverted enterprises are still afraid to take orders from the US for long and medium term, and can not arrange production in advance. Worries, anxiety and even panic have not changed much.