The Cotton Market Is In The "Bear Market", Kim Gu's Peak Season.

At the beginning of August, President Trump expressed great disappointment at the fact that the consultations between China and the United States had not made substantial progress in Shanghai, and then proposed tariffs on another US $300 billion export to the United States, and then China imposed tariffs on US $75 billion merchandise to counter its counterpart. Cotton prices fell sharply with the escalation of the Sino US situation, and spot prices also dropped. At the end of this month, cotton farmers began to harvest cotton in Hebei, Shandong and Anhui. The new cotton market also brought great pressure to the operators. Coming into September, will Kim Gu turn the market down this year?

Demand side: According to Zhuo Chuang information monitoring, in August cotton textile enterprises above Designated Size started up 54%, down 17.83% from the same period last year. The overall boot rate has not improved significantly, and continues to maintain a downward trend. In the southern part of Xinjiang, some advanced textile enterprises are starting less than 5. However, some enterprises in Shandong and Henan are having high inventory levels and tight funds. At present, enterprises that can maintain normal profits are limited to diversified textile enterprises, which are involved in product diversification and domestic sales. Small businesses with a single product and low risk defense capabilities are still more common. By the end of August, textile enterprises would have opened up the right amount of replenishment to meet Kim Gu's order demand, but this year it has not performed well. Many enterprises keep most cotton raw materials for more than half a month, and some enterprises only maintain a week's usage. In addition, with the increase of tariff rate of yarn exported to the United States, some spinning enterprises have accelerated the pace of transferring capacity to Southeast Asia. In addition to the poor demand for cotton by spinning enterprises, even traders are suffering from the unhappiness of cotton price turbulence. They dare not sell goods easily, and the demand for social elasticity is greatly squeezed.

Supply side: According to the China Cotton Association data, by the end of July, the total inventory of cotton turnover in China was about 2 million 396 thousand and 200 tons, a decrease of 521 thousand and 200 tons from the previous month, which is still 903 thousand tons higher than the same period last year. Among them, the turnover of commodity cotton in Xinjiang is 1 million 771 thousand and 700 tons. On the basis of Xinjiang's situation, Zhuo Chuang expects that Xinjiang will still have about 1 million 400 thousand tons of inventory at the end of August, which is at a high level of nearly 5 years. Many ginning companies in the territory said they had to consider the risks brought by the current high inventory, and even the enterprises said they would decide the seed cotton processing volume according to the current inventory. The fall in cotton prices has sounded the alarm for cotton related enterprises. The past blind business will be easily eliminated. Now we must be cautious and take appropriate measures to prevent risks.

As autumn draws near, enterprises, institutions and investors visiting Xinjiang are increasing. Cotton production has become the focus of attention in the whole country and even in the world. According to Zhuo Chuang's information monitoring, the area of cotton planting in North Xinjiang changed little in the new year. Although it was affected by low temperature at the initial stage of planting, the temperature in the later period picked up faster, and the yield per mu was slightly better than that of last year. Hail affected areas are limited in some areas. To increase or decrease, cotton production in Xinjiang is basically the same as last year.

Cotton supply is loose in the new year, coupled with high commercial stocks and normal cotton reserves in September, and the cautious operation of textile enterprises, demand or volume is difficult. Cotton is now in a "bear market". Judging from the bear market demand, Kim Gu's peak season is likely to fail.