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The rumors that the reserve price of cotton may rise up, Zheng Cotton rebounded from its low position last week and broke through the 30-day moving average. However, the subsequent gains did not continue and the market showed signs of weakness.
From the current point of view, it is unlikely that the price rumors are true. Regarding the trend of Zheng cotton in the latter part of the period, although the country's reserve reserve price will provide support for the cotton market, due to the increase in upstream supply and the downturn in downstream consumption, Zheng cotton does not have the conditions for a sharp rebound.
On the supply side, the domestic new cotton will soon be available in large quantities and high yields are expected. According to the monitoring report of China Cotton Institute, as of mid-August, the country’s cotton seedlings were better than the same period last year by nearly 15%, which is better than nearly 10% year-round. From the current situation, although some cotton areas such as Hebei and Shandong are affected by the rainy weather, it is understood that the impact on the yield is quite limited, and there is little room for speculation in later weather disasters.
From the demand level, on the one hand, the decline in orders is worrying. The US Cotton Export Weekly report showed that a total of 140,000 tons of export orders were cancelled last week, reflecting the fact that global demand is still weak.
In addition, industry insiders estimate that the domestic orders for garments may fall by 10% to 20% year-on-year this fall.
On the other hand, the high inventory of finished products of textile companies does not yet support a large number of supplements. Although the recent purchase of cotton by textile companies has slightly improved, the inventory of downstream finished products remains at a high level.
As of the end of July, the average yarn and grey cloth inventory of the textile enterprises in China totaled 45.54 days, which was higher than that of the same period last year by nearly 80%. The demand for library inventory is not optimistic. Before the poor demand situation improved, Zheng Cotton did not have the basis for a sharp rise.
From the current point of view, it is unlikely that the price rumors are true. Regarding the trend of Zheng cotton in the latter part of the period, although the country's reserve reserve price will provide support for the cotton market, due to the increase in upstream supply and the downturn in downstream consumption, Zheng cotton does not have the conditions for a sharp rebound.
On the supply side, the domestic new cotton will soon be available in large quantities and high yields are expected. According to the monitoring report of China Cotton Institute, as of mid-August, the country’s cotton seedlings were better than the same period last year by nearly 15%, which is better than nearly 10% year-round. From the current situation, although some cotton areas such as Hebei and Shandong are affected by the rainy weather, it is understood that the impact on the yield is quite limited, and there is little room for speculation in later weather disasters.
From the demand level, on the one hand, the decline in orders is worrying. The US Cotton Export Weekly report showed that a total of 140,000 tons of export orders were cancelled last week, reflecting the fact that global demand is still weak.
In addition, industry insiders estimate that the domestic orders for garments may fall by 10% to 20% year-on-year this fall.
On the other hand, the high inventory of finished products of textile companies does not yet support a large number of supplements. Although the recent purchase of cotton by textile companies has slightly improved, the inventory of downstream finished products remains at a high level.
As of the end of July, the average yarn and grey cloth inventory of the textile enterprises in China totaled 45.54 days, which was higher than that of the same period last year by nearly 80%. The demand for library inventory is not optimistic. Before the poor demand situation improved, Zheng Cotton did not have the basis for a sharp rise.
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