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SunSirs: Consolidation and Reduction of Chinese Cotton Price
January 19 2020 13:12:06SunSirs(Linda)

3128B grade contton lint in the domestic spot market is 13,901RMB/ton, which is 138RMB/ton lower than the price of January 14, or 0.98%, down 9.54% year-on-year. After the signing of the first agreement between China and the United States, Zhengzhou cotton's main force is in the vicinity of 14,000. On January 17, the closing price of Zhengzhou cotton main contract 2005 was 14,030RMB/ton, 400RMB/ton lower than the closing price on January 13. On January 16, the March contract was 70.22 cents per pound, down 131 points from the 13th; on May, the contract was 71.19 cents per pound, down 148 points.

According to relevant data, in 2017, the United States exported 2.5 million bales of cotton to China, with a total value of about US $1 billion. However, due to tariffs, the share of American cotton in China fell to about 18% last year. With the signing of the first trade agreement between China and the United States, cotton has been listed in the purchase list, and the quantity is still unclear. On the other hand, the market position of American cotton is set off by the large reduction of cotton production in Australia in 2019, the difficulty of cotton quality in India and the high price of Brazilian cotton. In 2020, the tension of US cotton export to China may be eased.

According to the price monitoring of SunSirs, as of January 17, 2020, the average price of 32S pure cotton yarn for knitting in Shandong Province is 21,975RMB/ton, up 0.25% from the beginning of the month, down 10.40% year on year.

Near the Spring Festival, part of the factory inventory low, the majority of order production. At the same time, the logistics outage is imminent, and the orders of years ago are coming to an end. The price offered by the mills was basically stable, and a few of them were raised due to the rise of cotton price. In 2019, the first three quarters of the cotton market were very difficult, and no big increase was seen, and cotton yarn sales were also significantly reduced. But after the first agreement between China and the United States, cotton prices gradually recovered in October. According to statistics, in December 2019, China's textile and clothing exports reached US $24.954 billion, an increase of 13.07% month on month and 7.95% year on year. Among them, the export volume of textiles (including textile yarn, fabrics and products) was US $11006.1 million, up 11.37% year on year.

Analysts from SunSirs believe that the signing of the first phase of the trade agreement between China and the United States has been completed, but the quantity of cotton imported from China to the United States is not clear, and the decline of cotton consumption has left the market hesitant. At the end of the year, the fund was profitable, the cotton period fell, the spot sales were flat, and the expected price was lowered.

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