Adequate Supply Of Cotton Prices Continue To Decline, Yarn Prices, Digestion And Inventory

In August, the supply and demand forecast of USDA agricultural products further reduced global cotton consumption, and overall international cotton prices fell. The domestic downstream market demand was sluggish, the overall slow delivery, high inventory and continuous low cotton prices; domestic textile enterprises continuously lowered the price of yarn and promoted inventory digestion.

International cotton prices continue to decline

In August, USDA global supply and demand forecast of agricultural products continued to reduce global cotton consumption, and global cotton supply and demand tended to be more relaxed. According to the report, 27 million 348 thousand tons of global cotton output in 2019/2020, 39 thousand tons reduction from last month, 26 million 796 thousand tons of consumption, 260 thousand tons reduction from the previous month, and the end of stock adjustment to 17 million 952 thousand tons, an increase of 452 thousand tons from the previous month.

This month, due to the continued escalation of Sino US trade conflicts and the market's concern over the demand for cotton market, international cotton prices continued to decline. According to statistics, in August 27th, the international average cotton price index (M) of China's main port of import cotton was 69.62 cents / pound, down 7.33% from the same month last month, and the cost of importing RMB was 12151 yuan / ton, down 6.63% from the same month last month. Cotton price difference between inside and outside 906 yuan / ton, the same month last month reduced by 319 yuan / ton.

Domestic cotton prices are sluggish

In August, in the absence of a marked improvement in downstream demand, domestic cotton supply was still abundant. In 2018/2019, cotton came out for fourth months, and the turnover fell sharply compared with last month, and the average price continued to fall. According to the published data of China cotton reserve, as of August 28th, the reserve cotton company of China's reserve cotton management company registered 218 thousand and 700 tons in August, with a turnover rate of 158 thousand tons, with a turnover rate of 70.96%, a decrease of 23.47 percentage points from the previous month, and a 11940.45 yuan / ton average price, a 6.74% decline from last month. According to the national cotton market monitoring system data, as of August 23rd, domestic cotton sales in 2018/2019 were 5 million 62 thousand tons (from the first sale of processing enterprises), according to the output of 6 million 105 thousand tons, there are still 1 million 43 thousand tons for sale. The number of Zheng cotton warehouse sheets is 466 thousand tons, and the cotton reserves will continue until the end of September, and new cotton will be listed in September.

Futures market, Sino US trade disputes continue to heat up, the market pessimism aggravated, Zheng cotton price as the United States decided to start in September to China $320 billion commodity tariff added, once down to the annual low, after the rebound is weak, low and persistent shocks. In August 27th, the main cotton CF1909 contract settlement price of 12345 yuan / ton, compared with the same period last month dropped 6.09%.

The spot market is deserted. According to research, at the end of this month, a few cotton processing enterprises in southern Xinjiang, such as Kuitun and Changji, offer quotes of "double 28" and "double 29" machine picking cotton as low as 12000~12300 yuan / ton (late flower, impurity 3.5% and above). The "double 30" machine pick up cotton is also below 12500 yuan / ton. Other enterprises have sharply reduced prices and have a strong mentality of going stock. In August 27th, the B index of cotton prices representing the average selling price of lint cotton in the mainland was 13057 yuan / ton, down 7.17% from the same month last month.

Yarn price reduction inventory

In August, the textile market orders and inventory difficulties were difficult to resolve, cotton yarn quotes continued to decline, although the end of the month due to the increase in the number of orders in winter, some yarn products have slightly improved, but far less than the same period last year. Since the United States added tariffs in September to most of the textile products, it is expected that the external demand for textile and clothing will continue to decline, and the sales of textile enterprises will shift more to the domestic market.

This month, domestic textile enterprises continuously cut down the price of cotton yarn and promoted inventory digestion. International cotton yarn shipments were sluggish, money back was difficult, and yarn prices continued to decline last month. In August 27th, China's 32 cotton combed cotton yarn 20572 yuan / ton, down 451 yuan / ton compared with the same period last month. As raw material PTA prices have risen, polyester staple fiber price of 7196 yuan / ton, compared with the same period last month fell 622 yuan / ton; international cotton yarn turnover situation is not good, India, Vietnam, Indonesia and other places cotton yarn sales continued to slump, traders default, breach of contract, buy back phenomenon increased. The average price of conventional cotton yarn is 421 yuan / ton higher than that of domestic yarn, which is reduced by 27 yuan / ton compared with the same period last month.

To sum up, due to the severe and complex international environment and the slowdown in domestic economic growth, the consumption of textile industry has dropped, and the pattern of oversupply of domestic cotton market has been highlighted. At the beginning of September, new cotton picking began, seasonal supply immediately increased, finished textile products in downstream textile market went slowly, textile enterprises purchasing mentality became cautious, and contrasted with the traditional peak season of "golden nine silver ten" in previous years. It is expected that the cotton market will continue to be weak and shock market amid repeated fermentation of Sino US trade situation. The recent cotton price is paying attention to the Sino US trade situation, but also needs to pay attention to the cotton harvest weather changes and the price of the new cotton scale.