Zheng Cotton Rose 920 Yuan / Ton In The Past Two Weeks, But Rebounded Highly Or Limited.

At present, cotton prices are in the low area, and rebounded under the stimulation of many factors. However, in terms of fundamentals, bounce is highly limited before inventory clearing or annual supply contraction.

Boosted by the good news, Zheng cotton began to rebound. Taking the 2001 contract as an example, the highest point in the past two weeks rose by 920 yuan / ton compared with the lowest point, which brought a hope of bottoming out for the long time cotton price. Cotton prices fall too much, the valuation advantage appears, in the stage of bad profits and many factors appear, it is easier to rebound. However, considering the fundamentals of Zheng cotton, the lifting height is expected to be limited.

Lido's effect is limited.

After the cotton price hit a new low, a number of factors began to enter the market perspective, including bad weather, high demand season and some major producers' policies.

First, since the middle of July, drought and hot weather in the United States have affected the growth rate of US cotton, which has dropped from 60% in late July to 43% in August 26th, the first time it was worse than the same period last year. However, in recent years, the excellent and good rate has risen rapidly, and has risen to 48% in the week of September 1st, up from 41% in the same period last year.

In addition, hailstones and recent rainfall in the main producing areas of Xinjiang have adverse effects on cotton growth. However, due to their limited scope, the impact on yield is limited. According to the survey, most of the southern Xinjiang provinces have increased their annual output per unit of cotton compared with last year's windbreaks.

Second, the market expects the demand for "golden nine silver ten" in the traditional peak season. However, the characteristics of peak season are not obvious. According to relevant data, as of the end of August, the operating rate of the cotton mill rose by only 0.9 percentage points to 42.9%, compared with the low of half a month ago, and the operating rate of the weaving mill rose by only 0.5 percentage points to 50.1%, compared with the low of half a month ago. At the same time, the inventory problem of finished goods has not been solved. Among them, the stock of cotton yarn in the cotton mill is 31.1 days, which has been increasing since the beginning of July, increasing by 12.1 days compared with that of the previous year. The inventory of the grey fabric in the weaving mill is 33.6 days, which began to decline from the end of August, but the decline was not obvious, and the increase was 6.6 days compared to the same period.

Third, whether the lowest MSP support price of cotton in India is effective or not depends on the actual storage capacity, while the domestic factor that really promotes the cotton price rebounding is in turn. Before the policy is released, it is inappropriate to trade too much. In addition, the resumption of Sino US economic and trade talks has brought benefits to the market, but some of them have already been fulfilled ahead of schedule. The market needs to prepare for the long-term negotiations and wait for the actual results to come down.

Ending inventory is high.

According to our survey, Xinjiang has 1 million 300 thousand to 1 million 400 thousand tons of cotton for sale, plus the mainland's commercial inventory, bonded area inventory and industrial inventory. By the end of August, the total inventory in the circulation sector was nearly 3 million tons.

According to the impact of inventory cycle on price, high inventory will suppress the uplink of cotton price. At the same time, high inventory prices still have leveraged financing risks and operating risks in the context of falling prices. Once risk occurs, there will be pressure to throw. There may also be a default in the import cotton market and may affect Zheng cotton. In addition, the whole downstream is still in a state of weakness. The downstream yarn and cloth finished products of cotton are in a state of high inventory and inhibit the purchasing enthusiasm of the downstream.

Supply is still plentiful.

The US Department of agriculture's August report shows that the global cotton inventory consumption ratio is 66.99%, an increase of 2.28 percentage points, an increase of 0.44 percentage points compared with the same period last year. This is the first time that the inventory consumption ratio has been rising for the first time in 4 consecutive years, and the data is the highest value in all years except the year of high reserves in China in the past 20 years.

The US Department of agriculture's current output forecast is conservative. According to the statistics of India's agricultural sector, India's cotton planting area is 12 million 490 thousand hectares, an increase of 6% over the same period last year. Considering the planting area, the yield given by the US Department of agriculture is based on the low yield. Once the weather improves, the actual output is expected to exceed expectations.

To sum up, at present, cotton prices are in the low area, and there will be a certain rebound under the stimulation of many factors. Once the favorable policies are introduced, the rebound will expand. However, in terms of fundamentals, there is a limited amount of bounce before inventory clearing or annual supply contraction.