Trade Consultation Anticipates Market Mentality. Cotton Prices Will Be Suppressed Before November.

According to the price monitoring of the business community, the average price of lint 3128B lint in the domestic spot market was 13113 yuan / ton as of December 11, 2019, basically unchanged from the price at the beginning of December. It seems that the price has not changed for two days, but the process is ups and downs. The market psychology is expected to fluctuate significantly with the Sino US trade negotiations, and cotton prices will rise first and then rise.

In December 2nd, China Cotton Reserve Management Co., Ltd. began to enter Xinjiang cotton, which is the first restart after six years of temporary storage. According to statistics, as of December 10th, the minimum price of cotton reserves was 12879 yuan / ton, and the highest transaction price was 13319 yuan / ton. In the transaction process, the lowest price difference between domestic and foreign cotton prices was 313 yuan / ton, and the highest price difference was 532 yuan / ton.

Trump, who made a strong statement at the beginning of the month, has said that there will be no agreement with China before the presidential election in 2020. The air market is more concentrated. By December 4th, the international cotton index (SM) is 78.31 cents / pound, down 116 points compared with November 29th. At the same time, the US cotton export weekly showed that on November 22-28, the signing amount of the US upland cotton was 37 thousand and 100 tons, 42% less than that of the previous week. The US 2019/20 land cotton transport volume decreased by 10% compared with the previous week, to 37 thousand and 800 tons, and the international cotton price pressure fell. (12.1-12.5)

In December 6th, the market took a turn for the better. China and the United States actively communicate with each other and strive to avoid the full levy of tariffs in December 15th. Then, the Customs Tariff Commission of the State Council of China announced that, from the needs of the market, domestic enterprises can independently import certain quantities of commodities from the United States through market purchase, and follow up or carry out part of the tariff elimination work according to the relevant enterprises' applications, and the positive signals will let cotton prices rebound. On the other hand, the US Department of Agriculture released the December Global Forecast of global production and demand, with a reduction in inventory and production and consumption at the beginning of the world, of which 900 thousand stocks were initially reduced, and the world's cotton consumption was reduced by 1 million 200 thousand packages, and the consumption of China was reduced by 1 million packs. The reduction of market consumption is greater than inventory, and the problem of oversupply is still outstanding. Cotton price rise is limited, the market tends to shake adjustment. (12.5-12.10)

According to the price monitoring of business associations, as of December 11, 2019, the average price of 32S cotton knitted pure cotton yarn in Shandong area was 21920 yuan / ton, down 0.27% from the beginning of the month, down 11.34% from the same period last year. At the beginning of December, the demand for fabric and fabric in the lower reaches was still relatively weak. Manufacturers insisted on using raw materials as follow, with fewer cotton yarn orders and smaller orders. Secondly, in order to get rid of inventory as soon as possible, the grey cloth enterprises continuously lowered the quoted price. Since the second half of this year, the price of pure cotton fabric has continued to decline, most of which are between 5-8%. Downstream profit reduction, resulting in rising cotton prices, yarn prices difficult to rise. Reduction of orders, so that small and medium-sized cotton mills to make plans for early holidays, transactions generally favorable.

The weak demand for the downstream industry makes the circulation of the industry chain prudent, and the factories are mostly buying and selling. Because cotton is a futures commodity and its price adjustment ability is slightly stronger, the position of the cotton mill is awkward. According to business analysts, the cotton prices in early December were initially suppressed, and the market was mostly subject to the expected fluctuations in Sino US trade negotiations. Most people felt that the improvement of the trade pattern could make a breakthrough in the market. In the near future, cotton prices will be stable and volatile, and the market is concerned about the progress of negotiations. In December 15th, cotton market will have a new turning point.