Cotton Enters The Rest Stage After Overfall

The disappointment of the Sino US negotiations is the first cause of the fall of the cotton cliffs.

Short term supply is the basic factor of decline.

Market performance

This week, Zheng cotton fell again.

As the Sino US talks were blocked, the market panic spread, worried that the US textile exports completely stagnate.

At the same time, huge warehouse receipts, state reserve auction, high business inventories.

So heavy, the market collapsed.

Today, the main contract of 1909 is 13505 yuan, and the weekly decline is 580 yuan.

Influencing factors and analysis

The logic of the current market crash is the disappointment of Sino US negotiations - the stagnation of US textile orders - the supply of adequate supplies in the face of stock Auctions - seeking support and bottom line in the form of a sharp fall.

It can be imagined that in the most optimistic case, the logic of future rise is: at the end of June, China and the United States reached the minimum agreement on textile orders recovery - the Sino US cotton production in autumn is not as good as expected - cotton rose sharply during the winter peak season.

The United States imposed tariffs on Chinese imports to 25%.

The news has limited impact on the market.

What the market is most worried about is that if the United States adds tariffs to the remaining 300 billion dollars, it will have a real impact on US $45 billion textile exports.

Insiders estimate that this will reduce about 1 million tons of cotton consumption (-12%).

The timetable is scheduled for mid June.

The most critical point of time is at the end of June.

The leaders of the two countries will meet at the G20 summit in Japan.

Supply side: according to the China Cotton Association, the total stock of cotton in the whole country was about 3 million 794 thousand tons at the end of April, which decreased by 369 thousand tons per month, but increased by 921 thousand tons compared with the same period last year.

Visible domestic commercial inventories in the same period of high.

In addition, 800 thousand tons of quasi tax import quota will be issued in June.

It can be seen that the supply of cotton is very sufficient at this stage.

As of May 24th, Zheng cotton registered warehouse receipt was 18810, equivalent to 752 thousand tons of cotton (compared with -3.5 million tons last week).

This week, the warehouse outflow was due to an estimated 100 thousand tons of outflow from the 1905 contract delivery, but the remaining contract will still be covered in the September contract.

It is reported that China's cotton planting area of 47 million 530 thousand mu, down 1.5% over the same period last year.

Cotton planting area in the United States is 13 million 780 thousand acres, down 2.2% from the same period last year.

Such a reduction will make the market more sensitive to weather fluctuations.

But on the whole, the supply and demand report in USDA5 month gave a blank view: the US cotton production in will increase by 20% to 4 million 790 thousand tons compared with the same period last year, resulting in an increase of 37% to 1 million 390 thousand tons in the end of the year. The output of cotton in the world increased by 1 million 520 thousand tons compared with the same period last year, and the consumption increased by 700 thousand tons.

Strategies and Strategies

Trade negotiations between China and the United States entered the stage of "cold war".

Zheng cotton collapse is expected to enter the rest stage after the fall.

Whether or not it will be decided depends on how China and the United States negotiate in the middle of 6.

It is better to observe at present.