Since mid-to-late July, because there is no obvious negative or bullish news in the market and the market direction needs to be confirmed, the Zheng cotton CF2009 contract price has continued to consolidate around 12,000 yuan/ton, and the long and short forces are temporarily in balance; while domestic Xinjiang cotton spot prices Except for some pending orders and point-price transactions, basis and fixed-price sales were inactive.
According to a survey of cotton processing enterprises in Aksu, Kashgar, Korla and other places in southern Xinjiang, as of late July, there was very little cotton inventory in 2019/20, and about 85% of ginners had cleared their warehouses ( A few cotton enterprises in Xinjiang that both process and operate have 3-10 batches for sale), and the inventory and sales entities of cotton resources have been converted into cotton traders; because the hedging ratio of traders generally exceeds 75% (some have strict management and standardized operations) Enterprise hedging is close to 100%), so not only the risks are controllable, but the cash flow pressure is not prominent, and there are less active price reductions and dumping of goods. Instead, the sentiment of reluctance to sell and price-raising prevails.
What is obviously different from the bullish sentiments of upstream cotton processing companies, traders, and Zheng cotton bulls is that cotton textile companies hold a neutral or even bearish view on the production and sales situation from July to September. On the one hand, they are actively The reserve cotton in the auction can be bought and used as much as possible to minimize the tying up of funds and the high cost risk caused by the decline in cotton prices; on the other hand, the factory quotations of cotton yarns are constantly lowered, and the cotton yarns are actively communicated with weaving factories and middlemen to pick up the goods, and the ” Go out of stock” and get your money back. Several yarn mills with 30,000 to 50,000 spindles in Henan, Shandong and other places said that although they have implemented production restrictions and reduction measures since late June (the operating rate dropped to 60-65%), due to the obvious decline in domestic sales orders and foreign trade processing The recovery of orders is slow, so the phenomenon of cotton yarn accumulation has not changed.
Cotton yarn middlemen in Jiangsu, Zhejiang, Guangdong and other places reported that inquiries and shipments of OE yarns have been constantly “putting on the brakes” in the past half month. Sales of OE21S and OE26S yarns were relatively active in May and June. Even “cut in half”; currently, except for C32 and C40S medium and high packaged bleached knitted yarns in coastal areas, the transaction volume is surprisingly poor. High count combed yarn, low count ring spun yarn and OE yarn are all in a state of sufficient supply and low price.
Some cotton textile mills judge that due to the possibility of a second outbreak of the new crown epidemic in autumn and winter, there is great uncertainty in Sino-US relations. In addition, companies in Southeast Asian countries such as Vietnam, Indonesia, Bangladesh, etc. are trying their best to seize the market. Therefore, the expectation that textile and clothing foreign trade exports will improve and rebound significantly in the second half of 2020 is not strong. Whether domestic sales can become a “reassurance” for enterprises is a key factor. First, whether the domestic epidemic will recur and not have an impact on trade, production, transportation, communication, etc.; second, whether the resumption of work and production of physical enterprises can be sustained, without layoffs and maintaining production. , ensure employment, and ensure stability, so that people have confidence and the ability to consume; third, whether the central bank’s credit policy can vigorously tilt towards small, medium and micro enterprises such as textiles and clothing, instead of just idling on the periphery, such as the recent stock market rally. Rainbow, shareholders have cashed out their profits, but real companies are struggling. Therefore, the plan of cotton companies and speculators to boost the price of Zheng Cotton and rely on raw materials to promote the rise of the entire industry such as cotton yarn, gray fabrics, and clothing may be just “wishful thinking.” </p
