Cotton Market Change And Its Influence During Spring Festival Holiday

During the Spring Festival holiday, the US cotton March contract fell from 74.28 cents / pound to 72.53 cents / pound, with a cumulative drop of 2.36%.

The changes in the cotton market are mainly reflected in three aspects, namely Sino US trade negotiations, USDA supply and demand monthly report and the US cotton weekly sales report.

Sino US trade disputes

The author's decision on Sino US trade disputes is "no final agreement has yet been reached, but is moving towards a relaxed direction". At present, it is not possible to lift the pressure on the macro economy and the cotton market. We should pay close attention to the guidelines for the progress of the negotiations for the cotton market.

Before the Spring Festival, the Chinese delegation ended its negotiations in the US and said that there was progress in the negotiations, laying the foundation for the final agreement.

On February 9th, the Ministry of Commerce of China issued a voice. The US delegation will arrive in Beijing on February 11th. The two sides will hold further consultations in Beijing from 14 to 15.

The impact of trade disputes on the cotton market can be divided into two main aspects: first, the impact of Global trade flows; the imposition of tariffs on the United States and cotton leads to more export of US cotton to non China regions; tariffs on Chinese textiles have led to the import of more non Chinese textile products by the United States; two, the global demand for cotton has declined, because the trade dispute has led to the downside risks of the global economy.

Before that, the market has fully traded the logic of shrinking demand. The main variable now lies in whether China and the United States can reach a final agreement. Once the agreement is reached, the upward fluctuation of cotton prices will increase.

USDA monthly supply and demand report

According to the USDA report February, the global cotton output in 2018/19 decreased from 62 thousand tons to 25 million 791 thousand tons in 12 months, and the output of China and Brazil increased by 108 thousand tons and 87 thousand tons respectively. The output of India and Turkey was reduced by 108 thousand tons and 130 thousand tons respectively. The cotton consumption in the world dropped by 432 thousand tons to 26 million 921 thousand tons over December, and the consumption of China, India, Vietnam and Turkey decreased by 218 thousand tons, 108 thousand tons, 218 thousand tons and 218 thousand tons respectively.

The market pressure fell but the decline was limited, because the market has already been fully expected to shrink the demand for trading, which is in line with market expectations.

According to the author's estimate, the current market paction is that the global consumption estimate in 2018/19 is reduced by more than 1 million tons over the previous year. This is a very pessimistic expectation. At present, the data given by USDA is 233 thousand tons higher than the previous year, and there are still great differences before the two.

US cotton weekly export report

In the week of December 27, 2018, the net signing of 2018/19 cotton 53 thousand and 600 tons, an increase of 8 thousand and 400 tons compared with the same period, the shipment of 45 thousand and 900 tons, a decrease of 3 thousand and 800 tons compared with the same period.

As of December 27, 2018, the cumulative net signing of 2018/19 cotton in the United States 2 million 504 thousand tons, accounting for 76.7% of the annual forecast; the cumulative shipment of 2018/19 cotton 805 thousand tons, shipment progress 32.1%.

Among them, China has signed a total of 379 thousand tons of cotton in 2018/19, accounting for 15.1% of the US cotton contract volume, and accumulatively shipped 99 thousand tons of 2018/19 cotton in the United States, accounting for 12.3% of the US cotton shipment.

To sum up, the cotton market in the holiday market is not too big. It is difficult to break the pattern of the cotton market in a short time. In the future, under the macro assumption that the trade disputes do not deteriorate and the financial crisis does not erupt, the absolute bottom of cotton price is basically proved; (1550016000) yuan / ton is the intensive pressure zone, which will digest the pressure in the form of twists and turns.

The expected deviation is mainly reflected in the macro level. If the trade disputes deteriorate unexpectedly or the financial crisis occurs on the macro level, it is difficult for cotton to be independent.