On the one hand, the long sentiment of the domestic market was reignited, and on the other hand, the time for dumping reserves was delayed, and Zheng Mian ’s September contract started to rise again on March 17. However, fundamentals have not improved and the rebound will not last.
Global inventory is high
The USDA report shows that the end of 2015/2016 global cotton inventories are estimated to drop to 10334 million bales, compared with an estimated 10408 million bales in February. The main reason for the reduction in global cotton stocks is the reduction in output. The main reason for the reduction in output is the reduction in cotton production in the main producing country. It is expected that the cotton output in India will be 5.84 million tons, which is lower than the 6.06 million tons estimated last month. However, the USDA's downward revision of global inventory estimates is not significant, and it will take time to destock.
U.S. acreage will increase
At the end of December 2015, the United States was hit by the worst snowstorm in 30 years, which alleviated the drought conditions in the farmland and helped increase cotton yields. Data released by the USDA at the Agricultural Outlook Forum shows that the United States' 2016/2017 cotton yield is expected to increase from 769 bales / acre to 812 bales / acre. Thanks to higher yields, the 2016/2017 cotton planting area in the United States will increase. According to the statistics of the Cotton Association of the United States, the area of ​​cotton planting intention in 2016/2017 was 55.292 million mu, an increase of 6.2% year-on-year.
In addition, due to the weak demand in the Chinese market, the contract volume of US cotton has decreased significantly. As of February 18, the total US cotton contracted for 2015/2016 was 1.536 million tons, a year-on-year decrease of 659,000 tons, a decrease of 30%, and 73% of the USDA export forecast was completed, which was lower than the 89% of the same period last year; Cotton shipments totaled 826,000 tons, a year-on-year decrease of 161,000 tons. Increasing cotton planting intentions will increase cotton production, which will negatively affect ICE cotton, which will also affect the internal market to a certain extent, and the slowdown in contract signing also reflects market concerns about weak demand.
Downturn in domestic consumption
At present, there are still 14.156 million tons of ending stocks in China, accounting for about 60% of global stocks. High cotton inventories have dampened the enthusiasm of cotton farmers, and China's cotton acreage will continue to decrease. The latest statistics of the national cotton market monitoring system show that in 2016/2017, the national cotton planting area was only 42.57 million mu, a year-on-year decrease of 14.414 million mu. Decreased plantings directly lead to reduced cotton production.
Cotton production is expected to be strong, but downstream consumption has not improved, and the operating conditions of textile companies have not improved. Statistics from the General Administration of Customs of China show that in February, China's textile exports reached 15.658 billion US dollars, a year-on-year decrease of 27.79%. Among them, the export value of textiles was US $ 6,083 million, a year-on-year decrease of 27.56%.
Heavy dumping pressure
Although the state reserve cotton rotation time has been postponed to mid-late April, dumping reserves is still an important factor influencing the cotton market in the near future. According to customs statistics, China imported 52,200 tons of cotton in February 2016, a year-on-year decrease of 102,800 tons, a decrease of 64.65%; from September 2015 to February 2016, China imported a total of 515,500 tons of cotton, a year-on-year decrease of 364,200 tons. Mainly because the purchasing entity is waiting for the reserve cotton auction. Regarding dumping and storage, a large cotton merchant believes that although the state reserve cotton competition dominates cotton prices from April to August, the key is to look at the grade, quality of cotton and the capital flow of textile companies. In 2015, the State Reserve Cotton planned to sell nearly 1 million tons of cotton, and eventually only sold 60,000 tons. The low transaction volume is due to the high quality of the state reserve cotton and the high starting price. This lint has been stored for another year, and the quality is not optimistic.
In general, cotton prices are weak due to the suppression of huge stocks. However, considering the cost and national policies to protect farmers, it is not appropriate to be too short of Zheng Cotton. Before the implementation of the reserve, it is recommended to wait and see. .
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