Sino US Trade Talks Restart Cotton Prices Rebound, Cotton Yarn Or Stop Fall

According to the price monitoring of the business community, the average price of lint 3128B lint in the domestic spot market was 12980 yuan / ton as of September 6, 2019, which was 5.18% lower than that of last month, down 20.42% from last year. In September 1st, the US tariff policy was formally implemented. In the early days, the Chinese side indicated that it was not ready to resume trade negotiations, and the market pressure and the cotton price weakness were lowered. But then the Sino US negotiation led the call to decide the next round of consultations in early October to boost market sentiment, and cotton prices rebounded.

In August, as the tension between Sino US trade relations intensified, Trump's attitude was strong and the market was pessimistic. Cotton prices were frustrated in the short term, and domestic spot prices fell 3.35% in the first week of the month, and then cotton prices entered a flat period. The Chinese side has made counter measures, and the United States has directly increased the tariff again. The market believes that there is little hope of reaching agreement between China and the United States. Cotton prices are in the second wave of decline. In the last week of August, the spot price of domestic lint fell by 4.3%.

In September, tariff policy fell and cotton prices continued to adjust weakly. However, the Sino US call decided to conduct the next round of consultations in October, and the market confidence was slightly restored. At the same time, China issued the information on the reduction of the quota. Some cotton growing areas in Xinjiang suffered from low-temperature weather, and the output and quality of new cotton were put on the table. Zheng cotton rebounded and rose for several days. The main contract broke through 13000 yuan / ton.

In terms of US cotton exports, China continued to break the contract and net exports grew. Sino US trade relations are tense and China's market will not agree well with us cotton. On the other hand, cotton prices have dropped significantly, and the overall performance of US cotton exports has been considerable. According to the US Department of agriculture report, on August 2019 23-29, the net contract volume of US cotton in the 2019/20 year was 36 thousand and 900 tons, up 11.9% from the previous week, of which Vietnam was the main force for new signing, the contract was 32 thousand and 500 tons, and China cancelled 1043 tons of contracts. The US cotton contract has increased, and domestic reserve cotton wheels are burning hot. In theory, the cotton reserve will end at the end of September, and the national cotton reserves will be concerned. Cotton prices will pick up in recent years, and textile enterprises will increase their willingness to buy cotton. In September 6th, the turnover rate of reserve cotton was 100%, with an average transaction price of 11973 yuan / ton, up 422 yuan / ton compared with Monday (9.2).

As for domestic cotton yarn, as of September 6th, the average price of pure cotton yarn of 21S high quality knitted top quality knitted goods in Shandong area was 20820 yuan / ton, which fell 2.44% from last month, down 13.79% from the same period last year. The average price of pure cotton yarn in 32S high quality knitted fabric is 22060 yuan / ton, down 1.96%, down 12.46% from the same period last year.

According to the latest statistics of the General Administration of Customs of China, in 2019 1-7, China imported 1 million 182 thousand and 800 tons of cotton yarn, down 3.61% from the same period last year, and exported 252 thousand and 400 tons, down 5.12% from the same period last year. The consumption of cotton yarn is flat. Due to the sharp reduction of cotton prices in August, cotton yarn is hard to maintain. Some manufacturers cut prices, manufacturers pay close attention to mainstream market quotations, and do not want to cut prices, nor do they want to leave the market. With the arrival of the traditional peak season, the downstream fabric and printing and dyeing enterprises indicated that since the end of August, orders have been showing signs of improvement, and inventory of grey fabrics has also been decreasing. Driven by demand, the price of cotton yarn will probably drop.

Business analysts believe that the recent rebound in cotton prices, but the situation of oversupply of cotton makes its rise support limited, and prices are expected to rise slightly.