Cotton Market Structure Is Strong, Weak, And Short Term Cotton Price Rise Is Still Bumpy.

Recently, under the impetus of the US cotton planting intention report and the Sino US trade negotiations, ICE prices continued to rise, Zheng cotton continued the regional shocks, showing a strong external weak pattern.

With China's 800 thousand tons of imported cotton quotas landing on Friday, ICE cotton price has been pushed up again. It is expected that in the short term, Zheng cotton will be strong and strong in the external market, and the pattern of external strength and internal weakness will remain unchanged.

Judging from the recent two days' internal and external market situation, ICE's main contract has maintained a strong upward trend, while Zheng cotton's main contract is in a situation of upward shock. Does this mean that Zheng cotton really has the long-term rising conditions?

How long can the rally last?

I believe that in the short term, cotton prices will continue to rise.

First, the US USDA4 month report is empty.

According to the US global demand forecast for April released by the US Department of agriculture, a slight decrease in global consumption resulted in an increase in final inventory in 2018/19.

In the year of 2018/19, domestic consumption in the US decreased and the end inventory increased.

Domestic consumption in the United States dropped to 3 million 100 thousand packs, reaching its lowest level in more than 100 years.

Two, domestic cotton supply and demand mismatch, cheap imported cotton is hot.

Investigation and understanding, Xinjiang cotton Xinjiang cotton has increased significantly in recent years, but goods sold generally. Imported cotton sales are hot, and low price cotton is in short supply.

It is understood that in recent years, low grade cotton is still unable to meet the market demand. Therefore, the problem of raw material substitution occurs, and whether downstream products can be replaced by raw materials, if the downstream needs only ordinary yarns to meet production, then increasing the cost of using high-quality yarns will affect the competitive pressure of enterprises, which results in the downstream supply and demand mismatch.

Therefore, by importing cheap cotton, it becomes a better choice, which is also the reason why the low priced imported cotton is popular in the near future.

Three, import quotas "boots landing".

Last Friday, the quota policy of imported cotton has finally come to the floor. The issuance of import quotas can not only meet the needs of purchasing the US cotton and trade surplus, but also meet the needs of textile mills, facilitate the signing of imported medium and low quality cotton, and meet the needs of cotton enterprises to reduce financial pressure.

With the import of cotton into the domestic market, the domestic cotton market will be impacted. The extent of the impact will depend on the concerns of the current market.

On the whole, once the Sino US trade talks are concluded, they will inject new vitality into the market, and the restoration of confidence and emotion will bring spring to the market.

But with the enthusiasm of the market rising, we still need to pay attention to the high cotton storage problem, the supply and demand mismatch of the low quality cotton in the spot market, the upper cover pressure, the downstream order, the new cotton planting and the weather conditions.