Four Factors Determine 2019 Cotton Market Is Difficult To Have Big Quotes.

Recently, the cotton market has seen more and more bullish arguments. Cotton people have been depressed for nearly half a year, and gradually found a breakthrough. Some Futures Company and organizations held the cotton forum and Summit Seminar. In 2019, the cotton bullish voice has taken full advantage. Some cotton traders in Xinjiang and the mainland are waiting for the price to sell.

"The import quota, the international market is short of cotton, no import quota and domestic shortage of cotton" has become the consensus of the whole cotton industry and investors.

Why do most people think 2019 cotton market "big action"? Some agencies believe that Sino US consultation is about to reach a consensus and sweep away the panic and haze brought by trade wars. The global and China's monetary policy has shifted (from "steady" to "moderate and moderate"), plus a series of stimulus measures such as lowering taxes and lowering taxes, and so on.

But in this wave higher than a wave of "rising tone", the author's worries are getting heavier and heavier. In mid 5 2018, the "big market" and 2019 May also arrived on schedule. There was no fear of breaking the agreement. In the 2012-2018 years, May 2013, May 2015, May 2016, May 2016, and Qi all ushered in a rising market. Only the "Qi" and "Qi" were exceptions. Zheng cotton rose from 900-4800 yuan / ton to a larger increase. Most of the other years' gains were concentrated between 1000-2000 yuan / ton, although there was a market but not a big move.

Why is the author not optimistic about the "big start" and "big profit opportunities" of cotton prices in 2019? The reasons are nothing more than the following points. Of course, the same phenomenon is common in the same factor, that is, public opinion is fair and reasonable, and women are reasonable. They are different from each other and have different positions. There are many heads in the analysis. The theory of empty bears is very difficult to convince which side is very difficult.

First, in 2019, China's cotton planting area continued to grow.

Although the income of Xinjiang and the mainland cotton growers is less than 2017/18 in the year of 2018/19, if we compare the benefits of cotton, wheat and other crops with cotton, we will find that the varieties of cotton are still relatively stable and beneficial, and with the Xinjiang government's policy oriented (to mention the "building high-quality cotton base"), unless the planting period of 3/4/5 is really "not enough", otherwise the reason of cotton planting area in 2019 has not been reduced, especially in the southern Xinjiang.

Second, there is little room for domestic cotton supply and demand speculation in 2018/19.

First of all, China's cotton imports have seen a "blowout" growth since 2018.

According to statistics, as of January 2019, China imported 875 thousand and 500 tons of cotton in 2018/19, an increase of 83.58% over the same period (including 280 thousand and 500 tons in January, an increase of 109.6% over the same period last year). The February, imports and year-on-year growth rates are expected to be very impressive. Secondly, the Sino US trade consultation concluded whether China's purchase of US agricultural products on the list included cotton and the United States cotton entered the Chinese market and had a certain impact on the domestic cotton market. Thirdly, the output of Xinjiang cotton in 2018/19 was much higher than expected, and domestic commercial inventories were not low, and short term speculation was lacking.

According to statistics, as of March 14th, Xinjiang cotton has accumulated 5 million 119 thousand tons of processing this year, and the quality and grade of cotton have increased significantly compared with the previous year. In February, the cotton business volume of the whole country was 4 million 565 thousand and 200 tons, which was 283 thousand and 400 tons lower than that of last month, and it is still in a high position. In addition, the "fact" of cotton reserves has been delayed in 2019, but there is little possibility of cancelling the dumping.

Considering that there are still more than 2 million 800 thousand tons of medium and low quality cotton in the national treasury, they can auction and expand their supply at any time. The speculators are very cautious in entering the market.

Third, commodity futures rebound is hard to say, and cotton and cotton yarn consumption can be effectively warmed up.

First, with the pace of US Federal Reserve raising interest rate slowing down and the chairman of the Federal Reserve saying that it will soon announce the end of the contraction plan, the US monetary policy has changed a lot. In addition, Britain's "off Europe" has evolved into "drag Europe" and the Sino US trade re negotiation will be postponed to April and so on.

The US dollar is expected to achieve a counterattack; second, the uncertainty of global economic recovery is increasing, and optimism is relatively limited.

According to the Ministry of economic development of Bloomberg, the global economic growth slowed sharply in 2018, and the rate of expansion slowed down to the lowest level since the global financial crisis in 2008.

The latest GDP tracking index of the Ministry of economic development of Bloomberg shows that the quarterly annualized growth rate of the global economy has dropped to 2.1% from 4% in the middle of last year. Third, the continued appreciation of the RMB exchange rate is not conducive to the export of thin textile and garment exports. The widening of the fluctuation is also not conducive to the medium and long term orders of enterprises.

Judging from the international financial situation, with the pause in the US interest rate raising process, the trend of interest rate spreads between China and the United States has been significantly relieved. The expectation of depreciation of the RMB exchange rate based on the interest rate parity logic will also fade away, and the RMB will continue to have a unilateral appreciation trend in the year, which will be beneficial to imports and is not conducive to exports.

Fourth, the Zhengshan warehouse receipt + effective forecast has reached a record high. How to arrange the "thunder" and how to avoid risks is crucial.

According to statistics, as of March 14th, Zheng cotton warehouse receipt 17006 (+74) Zhang, effectively forecast 3261 warehouse receipts, the total discount of 811 thousand tons of cotton, 800 thousand tons, the pass was undoubtedly broken, 850 thousand tons or even 900 thousand tons close.

After half a month's hovering (continuous consolidation of 77-79 tons), the warehouse receipts and forecast were further extended.

At present, the Zhengshan warehouse receipt and forecast is close to the sum of 2017 and 2018.

As long as the CF1905 contract broke 15500 yuan / ton, it attracted a large number of warehouse receipts "collapse" style fall.

There are mainly two ways for warehouse receipts to flow out in 3-8 months: first, the spot increase is obviously higher than the futures market, and the "upside down" is outstanding, which stimulates cotton mills and traders to pick up warehouse receipts (the buyer needs to consider the issue of warehouse receipt rise); two, the futures price decreases greatly, and the warehouse price is higher than that of the buyers.

Obviously, it is unlikely that one of the above conditions will happen in 3-5 months.