Epidemic Leading Market Changes, Incremental Storage, Stable Market

Domestic outbreaks suddenly came, domestic and foreign stock markets and commodities fell sharply, and domestic production and consumption were all greatly affected, and the downward pressure on the economy increased. In view of the impact of the epidemic, the US Department of agriculture has lowered global cotton consumption expectations, resulting in further easing of cotton supply in the international market. With the increase in the strength of the cotton reserve, the supply pressure of the domestic market has eased slightly, and cotton prices are showing signs of stabilization. In the market dominated by epidemic changes, most enterprises have to go all out to meet this unusual "starting season".

First, the domestic epidemic is coming suddenly, and the economic downward pressure is increasing.

On the eve of the Spring Festival of 2020, a sudden outbreak swept the north and south of the river. The whole country fought against the epidemic and became the main theme of the Spring Festival holiday in 2020. In January 31st, the WHO announced that it would list the new coronavirus epidemic as a public health emergencies of international concern, but stressed that there is no need to take measures to restrict international travel and trade. Nevertheless, the short-term impact of the epidemic on China's economy should not be underestimated. The stagnation of industrial chain activities caused by the epidemic will slow the recovery of domestic demand, bring new pressure to export trade, and the Chinese economy will face greater downward pressure. What policies the state will adopt to support the industries affected by the epidemic must be highly concerned.

Two, the supply of the international market is further relaxed, and the domestic market supply pressure has eased slightly.

The US Department of agriculture's latest global cotton supply and demand report shows that the world's cotton production in 2019/20 reached 26 million 417 thousand tons, an increase of 186 thousand tons from the previous month, and the global cotton consumption of 25 million 912 thousand tons, a reduction of 263 thousand tons from the previous month. The output exceeds 500 thousand tons, the 449 thousand month increase from the previous month, and the global cotton consumption and consumption ratio is 69%, reaching the highest level since 2017/18. According to the national cotton market monitoring system survey data, as of February 14th, the total domestic sale of seed cotton was 5 million 778 thousand tons of lint cotton, 2 million 809 thousand tons of lint were sold, 2 million 969 thousand tons of new cotton were on sale, 506 thousand tons less than last year, and the supply pressure has eased since December 2nd. It is noteworthy that the outbreak of the epidemic before the Spring Festival, the upstream supply and downstream sales have basically stagnated, and the recovery of demand will take some time.

Three, incremental storage and stabilization of the market, the dominant market situation changes

2020 during the Spring Festival, foreign markets and commodities declined in the wake of the epidemic. After the Spring Festival, Zheng cotton opened and closed down, and the risk aversion was concentrated. In order to stabilize market sentiment and guard against the spread of panic spread in the cotton textile industry chain, to boost market confidence and protect the healthy development of physical enterprises, the relevant ministries and commissions of the state have made decisive decisions, and the China cotton storage company has made precise preparations, announcing the daily increment of new cotton imports from the original 7000 tons / day to 18000 tons / day. Since the incremental rotation of cotton reserves, trading volume has increased substantially before the Spring Festival. The turnover rate is basically 100%. Zheng Mian futures prices have stabilized and rebounded, and the market pessimism has been alleviated, which is conducive to enhancing enterprises' confidence in subsequent normal resumption. However, in addition to the production masks and protective clothing enterprises, most textile enterprises are facing difficulties in returning to work: first, the epidemic prevention and control work is in progress, and the spinning workers will not be able to return in the short term. After that, they will have to observe for days before they can return to work. At the same time, enterprises are worried about whether sufficient supply of protective supplies is needed after resuming work, and the pressure of epidemic prevention and control is large. Two, some spinning enterprises may be faced with loan repayment difficulties in March because of poor sales; three, gray cloth and garment production enterprises are worried about product backlog, and continue to postpone construction, resulting in a decline in demand. It is understood that although foreign trade export orders have not been cancelled for a long time, the risk of order loss is bound to intensify if further delays are made. In short, most enterprises can only catch up with the work and epidemic prevention, and go all out to meet this unusual "start season".

The current market situation is dominated by epidemic changes. Since the Spring Festival, with the widespread spread of the epidemic, most commodity prices, including cotton, have been in the doldrums. If the latter is better, commodity prices are bound to rebound. Compared with other commodities, cotton has the support of purchasing and storage. Under the situation of improving the situation, it is easier to attract funds to participate, and the rebound will be stronger or stronger.

Four, domestic cotton production and marketing forecast

The current production and demand forecast will reduce the consumption of 2019/20 from 160 thousand tons to 7 million 428 thousand and 900 tons in the year of 2019/20, increase the export volume from 3 thousand and 200 tons to 32 thousand and 400 tons, and increase the stock from 156 thousand and 800 tons to 5 million 910 thousand and 100 tons at the end of the period.