Zheng cotton trend is relatively mild with high volatility
Market review
The United States Department of Agriculture has continuously lowered the United States cotton production, export data is good, capital speculation on the subject of reduced supply, the tight market pattern has encouraged the trend of ICE cotton bulls, corresponding to the old 3, 5, 7 contracts have risen continuously, and the price has broken through the 100 cents integer for many days. But on Friday, cotton prices again fell by the daily limit on a poor weekly export sales report, and the market corrected for overbuying. The trend of Zheng cotton is relatively moderate, and the price is mainly high and volatile.
At present, the performance of orders is not as good as expected before the holiday, constraining the rise in cotton prices. In addition, the larger upstream inventory has also formed a potential hedging pressure. However, the expansion of the cotton price difference between internal and external helps stimulate consumption growth, and it is expected that Zheng cotton prices tend to be strong and volatile, waiting for the news surface to boost.
Downstream market
China's economic situation is stable and good, but it still takes time to transmit to the domestic cotton consumption end. After the Spring Festival, affected by the rise in cotton prices, most textile enterprises raised the cotton yarn quotation of 100-500 yuan/ton, but the price increase was weak. Downstream demand side orders still need to wait, short-term supply and demand side positive guidance limited mainstream textile enterprises are still dominated by pre-holiday orders, wholesale procurement is not strong.
With the widening of the gap between domestic and foreign cotton prices, the advantage of domestic cotton prices is getting stronger, which may stimulate consumption growth to a certain extent. The overall situation of the domestic textile industry is still stable, the probability of recovery, inventory pressure is not large for the time being, which supports cotton prices, but the downstream replenment of raw materials and the acceptance of high cotton prices need to depend on whether there are new orders to follow up and whether the price can be transmitted downward, at present, the downstream is cautious about this, we are concerned about the actual demand in March.
Summary and prospect
Domestic cotton sales and processing volume is low, which is mainly related to the decline of production this year; The sales volume is significantly lower than in previous years, more reflecting the decline in downstream capacity, which has become the main factor in suppressing the disk. With the increasingly serious inversion of domestic and foreign cotton prices, imported cotton sales have come to a halt, and the widening of the gap between domestic and foreign cotton prices has helped stimulate the growth of domestic cotton consumption. Since February has entered the storage stage, the future upstream cotton inventory pressure or will be further alleviated. Cotton spot mainstream sales basis is temporarily stable, but also wait for the news or consumption to boost, focusing on the "gold three silver four" downstream market orders.
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