Behind The Cotton Futures Slump: Global Output Rises Sharply And Demand For Downstream Cotton Yarn Slows Down.

Following the sharp fall in soybeans, the recent domestic cotton futures prices fell rapidly.

In May 13th, cotton futures main contract 1909, opened 15185 yuan / ton, the highest 15240 yuan / ton, the lowest 14560 yuan / ton, fell 650 yuan / ton, or 4.27%, and reported 14560 yuan / ton.

Cotton yarn futures contract 2001, down 985 yuan / ton, or 4.01%, 23570 yuan / ton.

"Today, the first round of panic and slump has occurred. There has been a lot of panic in the capital market. The market is coming too fast, and there is no way to stop the loss. It is estimated that some investors will continue to cut down the warehouse tonight.

With the continuous development of domestic cotton reserves, the turnover rate in the first week of May was close to 100%, and the base price of second weeks or down was about 300 yuan / ton.

It can be said that the collapse of the reserve cotton reserve price has been superimposed on external uncertainties, and Zheng cotton has continued to bear pressure.

Mr. Li, a market investor, told the "China Times" reporter.

According to today's statistics bulletin of the General Administration of customs, the total export volume of textiles and clothing in 1-4 months was 75 billion 764 million US dollars, down 3.69% from the same period last year (1.56% yuan in the year over year), and the growth rate slowed down 1.91 percentage points compared with the first quarter of this year (RMB growth rate decreased by 1.78 percentage points).

Among them, the total export volume of textiles was 36 billion 670 million US dollars, an increase of 0.81% over the same period (6.33% yuan over the same period last year), and the total export volume of clothing was 39 billion 90 million US dollars, down 7.56% compared with the same period last year.

Compared with the substantial increase in textile and clothing exports last month (in US dollars), textile exports in March increased by 35.56% compared to the same period last year, and clothing exports increased by 20.95% over the same period last year. In April, the growth rate of textile and clothing exports slowed down significantly, and the total export volume was 19 billion 460 million US dollars, down 8.72% compared with the same period last year (3.19% in the year before RMB).

Among them, textiles exported 9 billion 789 million US dollars in the month, down 6.76% from the same period last year (1.1% yuan in the same period last year); clothing exported 9 billion 671 million US dollars in the same month, down 10.6% compared with the same period last year (5.2% in the year before RMB).

In the first 4 months of this year, the export growth rate of goods in China was 5.7% (RMB), and textile exports were higher than the national export growth rate by 0.63 percentage points. Clothing was lower than the national export growth rate by 8.23 percentage points. The uncertainty of the macro trade environment brought realistic challenges to the stability of clothing export.

In addition, Yan futures, an analyst at Galaxy futures, said that the macro systemic risk of the market is bigger in the near future, and that the macro sentiment will dominate the market in the short term.

In the recent fall of futures prices, the futures price is more attractive to the downstream textile enterprises, and the cotton base price is active in the market, and the selling company at a single price is very passive.

Recently, cotton yarn spot trading was weak, textile enterprises started to operate relatively low, cotton yarn prices also weakened, most traders actively shipped.

"The main reason for the weak cotton price is due to the gradual increase of the global planting area over the past three years, and the output has reached a higher level, and the gap between the global production and marketing has been narrowing down.

At the same time, coupled with the global balance of supply and demand last year, the domestic market is still selling cotton to the market.

Hong Runxia, general manager of the Yangtze futures cotton textile industry division, told the "China Times" reporter.

She said that in the context of global supply and demand has reached a balance, the domestic still throw 2 million tons of storage, and even in June announced the domestic postponed dumping and storage paction 500 thousand tons + the additional quota 800 thousand tons of policy pressure, the state stock pfer to the social inventory is particularly large, new cotton and concentrated listing.

In the fourth quarter of last year, in the background of the macro pessimism, the first half of 2018/19 went through the worst stage, which made the supply very ample this year.

Sino US negotiations encountered resistance, the face of tariff increases, as well as 800 thousand tons of warehouse receipts for sale, cotton prices in the future is expected to show a downward trend.

According to some cotton traders, from some cotton related yarn and clothing conference orders analysis, the current market is too cold, not only fewer participants, but fewer orders, many factors that are not conducive to long-term stable development of the market are intertwined, making it difficult for everyone to feel comfortable. Investors who have larger cotton resources have stronger desire to sell, which may be one of the main reasons for the sharp decline of cotton today.

Yan you FA, general manager of Yan Shi De Hai Agricultural Technology Co., Ltd., Xinjiang, also said that farmers who planted cotton in Xinjiang basically earned money last year. This year most farmers in Xinjiang have high enthusiasm for planting cotton.

Although many areas of cotton have been damaged by bad weather, local farmers are actively replanting them.

Recently, the company is sending cotton seeds to all parts of Xinjiang, so that farmers can replant in time.

He estimated that the cotton planting area in Xinjiang will not decrease this year, and the total output in the future will not decrease significantly.

Recently, some of the US agricultural products, including cotton, are relatively large in decline, which is expected to have some impact on trade negotiations. There are also some weak supply and demand fundamentals.

In May 10th, the US agriculture department (USDA) released the May supply and demand report showing that the global 2019/20 cotton inventory was 6 million 400 thousand bales, and the US 2018/2019 cotton year-end inventory estimate was 4 million 650 thousand packages, higher than that of April's estimated 4 million 400 thousand packages.

Hong Runxia told the China Times reporter that although the forecast data have not changed much, it is also sufficient to prove that the pattern of high cotton inventories in the world has not changed.

In addition, forecasting the price trend of 2019/20 is a mixed sight at present. The favorite place is the domestic Treasury's bottom line, the domestic and foreign macroscopical counter cyclical stimulation policy, the probability of El Nino weather in 2019 is large, and there may be fluctuating market.

However, Hong Runxia said that the worry is that if the global weather is good, the output will increase by 1 million 450 thousand tons, and the trade frictions between China and the United States will lead to a further decline in consumption and ample supply. Next year, there will still be no market pressure.

Therefore, cotton prices will fall easily in 2019.

For next year, if we expect to have a volatile market, we need weather, macro and round storage conditions, otherwise we will not be optimistic.

Price operation interval forecast, this year in 14000-16500 yuan / ton operation, next year can only predict two extreme interval in 13000-18000 yuan / ton operation.

In May 10th, Trump said it would impose tariffs on 200 billion US dollars from China. After that, it would also have to take the necessary counter measures.

Under the influence of an unhappy trade climate, cotton prices in the United States have been falling continuously, while domestic cotton prices have dropped, which is more worrying about the downstream cotton textile exports.

Although the $200 billion levy does not cover most clothing and textiles, the existence of related uncertainties still drives cotton prices down.

In addition, in the short to medium term, besides the poor downstream consumption, the domestic and foreign capital for cotton production is beginning to flow out under the influence of the international environment.

As of May 13th, Zheng cotton sedimentation fund was about 3 billion 350 million, about 4 billion higher than two weeks ago; as of May 7th, the US cotton futures and options fund was net single 21238, accounting for 7.9%, two weeks ago, the high point is about 16.5%.