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Cotton: Vaccine Can'T Change The Decline Of European And American Spring Orders

2020/11/18 15:35:00 0

CottonVaccineOrderDeclineCotton PriceDrive

New cotton: the decline of Xinjiang cotton quality and production reduced the delivery volume of new cotton, and the price was stable in the near future; the quality decline of American cotton caused by several hurricanes was not conducive to delivery. The planting area of India increased, and the precipitation in some production areas was too much, and the increase of yield decreased.

Reserve cotton: finished, 500000 tons of output task completed. It is planned to ship in 500000 tons.

American cotton sales: China, Vietnam procurement is an important support, low prices stimulate point price transactions.

Demand: the demand in October improved significantly, export orders in November were not optimistic under the epidemic situation in Europe and the United States, and domestic e-commerce orders were lower than expected. After the start-up of Southeast Asia and South Asia weakens, orders will flow back, which is expected to bring an increase of 600000 tons at most.

Macro: the new president of the United States may be Biden. Biden promised to abolish the trade tariff barrier during his election campaign, but later canvassed for consideration of Taxation on Chinese goods. At present, after the first phase of the agreement has reached a certain stage, both sides are more satisfied with the progress. Recently, China has significantly reduced the purchase of agricultural products from the United States (000061, stock bar). To increase the possibility of second outbreak overseas. Good progress has been made in vaccine research and development.

Strategy suggestions:

Seasonal orders decreased, cotton spinning midstream high start or difficult to continue. Textile enterprises purchase after the order, price weakening further reduce the enthusiasm of enterprises to prepare goods. Disk only gives cotton cover space in Northern Xinjiang, new cotton cost has strong support on disk, Zheng cotton is weak, and enthusiasm of warehouse receipt registration decreases. The epidemic situation affects the total consumption. If it is difficult for overseas cotton spinning to start, the supply of low-cost imported yarn will decrease, and the internal and external linkage will be weakened. Meanwhile, orders will flow back and reserve cotton will be put into circulation, which will give new support to the falling cotton prices. The new cotton cost is high, the bottom support is strong, the space under the cotton price is not big, the overall cotton price will remain volatile, it is recommended to wait and see.

Xinjiang cotton ban, overseas epidemic high epidemic, Sino US relations.

supply

Xinjiang: the harvest in Northern Xinjiang is completed, and the sale is coming to an end. The cotton picking in southern Xinjiang is coming to an end. The epidemic situation may delay Kashgar. The purchase price of machine procurement was relatively stable this week, and the price rise in the early stage was mainly affected by the new capacity of ginning plant, the decline of new cotton quality, and the fund use requirements of agricultural development bank. According to 6.8 yuan / kg of seed cotton, 2.5 yuan / kg of cottonseed, 14% of 42% of machine picked loss, plus 800 yuan of processing cost, the discount is 15200 yuan / ton. If the standard of 6.5 yuan / kg is adopted, the price will reach 14400 yuan / ton.

Quality deviation, high moisture content, warehouse receipt discount, low cost performance of registered warehouse receipt. Spot enterprises tend to fast in and fast out.

The area of cotton fields in the mainland continued to decrease. The long Meiyu season and autumn wet time in the Yangtze River had a great negative impact on cotton, and the actual yield reduction was higher than expected. The Yellow River Basin had more precipitation in the first and middle of August, and the expected yield increase was weakened. The autumn harvest was favorable and the harvest was completed at the end of October. The area of "help fields" in Xinjiang decreased, while the yield per unit area in Northern Xinjiang decreased due to drought. On the whole, the cotton production reduction in 2020 is expected to exceed 250000 tons.

According to the national cotton market monitoring system, as of November 13, 2020, China's new cotton picking progress was 95.9%, 0.3 percentage points faster than last year. The total sales of seed cotton converted lint was 5.243 million tons, with a year-on-year increase of 106000 tons. The total processing lint was 2.893 million tons, with a processing rate of 55.2%, an increase of 2.0 percentage points year-on-year.

United States: the main production area of Texas due to drought. The decline in sown area in the United States has led to reduced production. In addition, hurricanes repeatedly affected the southern United States, which had a negative impact on cotton grades.

In the United States, 11.99 million hectares of upland cotton were sown, 11.1% less than expected in March.

In September, the hurricane had little impact on the yield, but the hurricane continued to affect the cotton area. At present, American cotton was mainly produced in the harvest period. The hurricane mainly affected the color grade, which was unfavorable to the delivery and boosted the cotton price.

Harvest progress continues to accelerate: by November 8, 2020, the harvest of cotton in the United States has been completed by 61%, 4 percentage points faster than the average in five years, and 2 percentage points faster than the average in the previous year.

USDA's November supply and demand report did not make any adjustment to the US cotton output, which remained at 3.71 million tons.

Benefited from the advance of monsoon rainfall, the cotton planting progress in India moved forward, and the total area was basically flat and slightly increased. According to the report of USDA counsellor in Mumbai on October 30, India's yield and harvest area were affected by excessive precipitation, and the total output was reduced by 150000 tons to 6380000 tons, but the USDA report in November did not reduce the output.

American cotton export: contract improvement, rapid shipment. US cotton export: as of the week of November 5, the net sales of orders in 2020 / 21 were 53700 tons, 7100 tons were purchased by China, 14000 tons were purchased by Pakistan, 12700 tons were purchased by Vietnam, and 3400 tons were shipped in 2021 / 22; and 45400 tons were shipped, including 58900 tons to China and 13400 tons to Vietnam.

In 2020 / 21, US cotton signed a total of 2.06 million tons, achieving the target of 67%, 3 percentage points slower than last year; 790000 tons of cotton were shipped, achieving the target of 26%, 8 percentage points faster than last year.

The first day of grain purchase agreement (more than 2 million tons of grain in the first week) is needed in China.

The United States issued "Xinjiang supply chain business advisory notice" in July, which endangers the interests of the global textile industry and fair competition.

On August 31, the national development and Reform Commission issued an import quota of 400000 tons for non-state-owned enterprises in response to the ban.

On September 2, the United States planned to ban Xinjiang cotton. The U.S. House of Representatives passed the plan on September 22. Usually, a new bill needs to pass through the Senate before it is signed by the president of the United States. The law has made some overseas brands ready to replace Xinjiang cotton.

On October 12, the New York Times reported that U.S. trade representative lethizer and U.S. Secretary of Finance and agriculture considered that China had agreed to purchase nearly $2 billion of US cotton, or planned not to impose restrictions on Xinjiang cotton.

After Biden was elected president, his actions on Chinese traditional industries may be reduced. However, before leaving office or continuing to impose sanctions on China, trump signed on November 12 to prohibit any US investors from investing in enterprises associated with the Chinese military. The six Republicans mentioned the absolute difficulty of the current Supreme Court and the right of the Democratic Party to overturn the ban in the future.

In September, the import of cotton was 210000 tons, an increase of 70000 tons on a month on month basis and a year-on-year increase of 130000 tons, which was at the highest level in five years. From September 2019 to August 2020, the total import volume was 1.6 million tons, a year-on-year decrease of 20.8%. In August, 170000 tons of cotton yarn was imported, which was flat on a month on month basis; from September 2019 to August 2020, the cumulative import was 1.81 million tons, a year-on-year decrease of 8.1%.

Affected by the Sino US trade agreement, USDA increased China's cotton import volume from 110000 tons to 2070000 tons in 2020 / 21.

The price of old cotton in 18 / 19 was 61.8 cents / pound, and that in 19 / 20 years was 63.5 cents / pound. According to the 1% duty paid price, the import profit of American cotton is 1600 yuan / ton, which is equal to Brazil cotton, and Indian cotton is 700 yuan / ton cheaper than Brazil cotton. The competitiveness of Indian low-cost cotton in Southeast Asia and South Asia is still strong, which is an important reason for the slow progress of American cotton procurement in recent years.

In October 2020, BCO's commercial stock of cotton is 3.192 million tons, and BCO's industrial stock of cotton is 721200 tons.

As of October 30, the outflow of registered warehouse receipts increased by 2700 tons. It is difficult for new cotton registered warehouse receipts to be affected by the price. Meanwhile, affected by the weather, the total amount of high-quality cotton is expected to be less than that of last year. The price difference between January and may is 50 yuan / ton, which cannot cover the storage cost and cannot move the warehouse.

Delivery rules: Zheng Shangsuo updated the delivery rules on July 24, 2020. From September 1, 2021, the impurity ratio is limited to 3.5%, and the validity period of warehouse receipts is reduced from March of N + 2 to November of N + 1 year. In the new delivery rules on November 13, 2020, the discount on cotton color grade and length was lowered.

Rotation of reserve cotton: from July 1 to September 30, the total transaction volume was 503400 tons, with an average transaction price of 11789 yuan / ton, or 13099 yuan / ton of 3128b.

It is required to ship in 500000 tons, which is required to reach double 28, and the price difference between internal and external is 800 yuan / ton, starting from December 1. At present, the price difference is still high.

Industrial chain demand

1. Analysis of mill inventory

November began to be the off-season, the market slowly weakened, trading slowly weakened, orders increased less, but still maintained high boot. The raw material inventory of the mill was flat and slightly decreased this week, and the raw material just needed to be replenished; the finished product inventory increased slightly on a month on month basis, but was at a historical low.

2. Textile mill inventory analysis

The operation of grey fabric mills is better than that of yarn mills. After the reduction of orders, the willingness of textile mills to stock raw materials decreases. As the inventory of finished products increases slightly, it is still at a low level.

3. Textile enterprises and textile enterprises start work

High: the operating rate of cotton mills dropped slightly to 60.9% this week, but the operating rate of cotton fabrics mills remained unchanged at 60.0%. In the late stage, the order accumulation rate is mainly slow down due to the shortage of orders. In terms of profit, the immediate profit of yarn was narrowed.

4. Operating load in Vietnam, India and Pakistan

Construction in Southeast Asia did not weaken significantly and remained at a high level. The downstream start-up of imported yarn is still high. Import profit closed, import yarn consumption decreased, import yarn port inventory increased slightly.

Export and domestic sales data

According to the Chinese customs, in October 2020, the total export of textiles and clothing was 24.8 billion US dollars, an increase of 10.7% year-on-year; the cumulative export was 240.6 billion US dollars, a slight increase of 7.2% year-on-year, an improvement of 0.2% compared with September. Among them, the export of clothing in October was 15.2 billion US dollars, a decrease of 2 billion US dollars on a month on month basis, but a year-on-year increase of 6.6%; the cumulative export of US $111 billion, a cumulative year-on-year decrease of 11.7%, a decrease of 1.7%. In October, the textile export was US $11.7 billion, a decrease of US $1.5 billion on a month on month basis, but it still increased by 15.6% year-on-year; the cumulative export was US $129.6 billion, with a year-on-year increase of 31.1%, a decrease of 1.8 percentage points compared with September.

Retail sales of clothing in the United States fell in September. In August, UK clothing retail sales fell 15.5% year-on-year. In August, German clothing retail sales fell 7.4% year-on-year. In June, Italian clothing retail sales increased by 6.5% year-on-year.

Supply and demand pattern

Supply side: Xinjiang production reduction, quality decline, the good is cashing in, the US cotton quality decline is cashing in. There was no bright spot in USDA's November supply and demand report, and India's output was not reduced. US cotton export: China's procurement slowed down, and the transaction was better at low prices. The US cotton export relied on China and Vietnam for procurement. The implementation of the Sino US agreement was in good progress. However, China has significantly reduced the purchase of agricultural products from the United States recently. Demand side: the overall recovery in October exceeded expectations, and the inventory in the middle and lower reaches of the industrial chain is still showing good performance. The demand cooling rate in November may be faster than expected, and the increment of domestic sales is insufficient. Due to the sharp decrease of export orders in spring, enterprises can only accept orders when they have profits. At present, the profits of yarn are greatly reduced. However, the memory of discount sales caused by force majeure during delivery this year is still fresh. Yarn, grey cloth transaction cooling, high boot need order support. The yarn start-up rate in Southeast Asia is still at a high level, and the total amount of return orders may not be as expected.

If Southeast Asia and South Asia can not start work, the return of orders and the rotation of reserved cotton into China will support cotton prices.

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