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[People Say Cotton] The Market Shows Signs Of Good Fortune How Does The Cotton Market Interpret?

Nov 26, 2018

Recently, the cotton market has seen a number of positive signs. The main performance is as follows:

1. The State Council convened an executive meeting to increase financial support to ease the financing of private enterprises, especially small and micro enterprises.

For textile and garment enterprises with a large number of private enterprises and small and medium-sized enterprises, the gradual landing of these policies and measures will be a big plus.

Second, Zheng cotton futures ushered in the outsole

On November 21, the main contract of Zhengmian Futures closed at 15,390 yuan / ton, soaring 605 yuan / ton. On the 22nd, Zheng cotton volatility adjustment, the main closing price of 15,235 yuan / ton, down 155 yuan / ton. The trend of Zheng cotton grinding bottom is obvious, and market confidence is gradually laid. According to foreign news on November 21, ICE futures rose about 2% on Wednesday after falling for two consecutive days. The most active March contract rose 1.35 cents to 78.78 cents per pound. The Spring River Plumbing Duck Prophet, futures as the market "wind vane" and "barometer", its rebound trend caused market concern.

Third, the G20 summit will be held at the end of the month

At present, the focus of the market is the meeting between Chinese and American leaders at the G20 summit at the end of the month. If the Sino-US trade talks improve, the domestic market will improve. There is another possibility. If the meeting does not have a clear conclusion, the "hope" of the market will turn into "disappointment", but it will be a bad market. Therefore, the dialogue between the leaders of the two sides will become the biggest uncertainty in the market.

Then, in the face of the favorable market, how will cotton go? The author analyzes that the market needs to have the following conditions:

First, whether the textile factory concentrates on replenishing the library

Currently, most textile mills still use reserve cotton. According to data from a large-scale enterprise in Shandong, the stock of cotton stocks will support more than 20 days. In other words, the centralized replenishment of the textile mills will be postponed until early or mid-December.

Second, price fluctuations of other raw materials

As of the 20th, the price of 1.4D*38mm straight-spun polyester staple fiber in the Lulu area was around 9,200 yuan/ton, and the transaction price of the single transaction was negotiable. In the past week, the price of polyester staple fiber has stabilized.

Third, the order problem of the textile mill

On the 23rd, a person in charge of a textile factory in Shandong introduced that in 2016, the cotton yarn sales of the factory were in short supply, and the weaving factory needed to queue up for pick-up; although the cotton yarn was in stock in 2017, the inventory scale showed a downward trend, and the cotton yarn stocks continued to increase this year. difficult. Weaving mills have reduced orders and can only reduce cotton yarn purchases. In particular, the dyeing factory is a barometer of the textile industry. Since the second half of last year, due to the impact of environmental protection, the printing and dyeing enterprises have been shut down, which has affected the parade in the industrial chain to some extent. Therefore, the market expects that orders will not change much this winter. Most companies are hoping for orders in spring and summer of 2019. In other words, cotton yarn orders are getting better, at least until January and February of 2019.

In summary, there have been a number of positive signs in the market in the near future. In particular, Zheng cotton’s bottoming out will be triggered at once, but the downstream market is still not completely “defrozen”, and the cotton spot will remain weak in the short-term.