Cotton City Observation: Cotton Prices Upward Obstruction Can Not Be Ignored

Recently, Zheng cotton uplink was obviously blocked. Yesterday's main contract CF2009 hit a low of 11460 yuan / ton, and then operated under 11700 yuan / ton. Cotton prices have dropped, and the pace of raw material purchasing has also slowed down. According to the feedback from specialized cotton warehouse in some areas of Xinjiang, the number of lint outbound stores has dropped significantly in recent days, and the enthusiasm of market purchase and sale has cooled down.

According to some cotton enterprises' views, cotton prices are difficult to keep rising, which are caused by several important worries that can not be ignored in the current market. The main points are summarized as follows: first, the impact of the epidemic on the entire cotton textile industry can not be repaired for a short time. The loss and closure of some terminal fast fashion enterprises will definitely reduce the orders on the upstream and downstream. At present, although some countries have begun to engage in foreign trade activities, their textile enterprises have not resumed production and resumed production. At the same time, it is not plain sailing for domestic enterprises to follow up new customers and new orders. Therefore, from the recovery of foreign trade orders, it will be a blessing to recover more than a half before June. Two, domestic cotton enterprises demand for cotton this year is expected to decline, coupled with the spread of foreign epidemics, imports of cotton and yarn have been greatly reduced enthusiasm. According to customs statistics, China imported 120 thousand tons of cotton in April 2020, a decrease of 40% compared to the same period, a decrease of 33.3% over the same period last year, and 140 thousand tons of imported cotton yarn, a decrease of 26.32% over the same period last year. In May, worries about the lack of cotton demand in the market have not been alleviated. Poor demand or the biggest drag on cotton prices in the current year. Three, the operation of the industrial chain is sluggish, and the capital flow of enterprises is insufficient. Some cotton ginning plants and trading enterprises are difficult to sell because of lint, and the cycle of repayment is delayed, while loans and pledge funds are difficult to settle in time. In the past, the way of grabbing profits by stockpiling goods has been out of order. At present, small and prudent small-scale operation restricts the overall cash flow rhythm to a certain extent. In addition, textile products are hard to sell, which is also under the pressure of capital occupation, making it difficult for the upstream and downstream businesses to make smooth delivery.

In view of the above factors, cotton prices continue to go up and down because of the impact of the overstatement of Sino US trade disputes and global economic slowdown. We should take the whole situation into account and wait for the turning point while looking at the existing problems.