Zheng Cotton Shock Market Cautious Watch

At the end of last weekend's G20 summit, the first meeting between China and the US dollar achieved good results. First, the US side said that it would no longer impose new tariffs on Chinese exports; secondly, the two countries agreed to resume economic and trade consultations to discuss specific issues. At a time when the market tense atmosphere eased, the stock market and commodity futures rose sharply on Monday, and domestic and foreign cotton futures were also opened at a high level.

In July 1st, Zheng cotton main futures CF1909 contract opened directly to 14200 yuan / ton, while the US cotton ICE main contract also rushed to 68 cents / pound, the enthusiasm of the industry was high. But it didn't last long. On the same day, Zheng cotton's night plate dropped to 13800 yuan / ton. On Tuesday night, it hit 13650 yuan / ton low point, and just two days, Zheng cotton high fell rapidly, and optimism quickly subsided. Some spot cotton merchants even said frankly, "at present, the price volatility is not stable, there is no way to sell. The price has just been reported, and the price has not yet been discussed, and the price has to be adjusted." Although there is no additional tariff of $300 billion, textile enterprises can grasp a certain amount of orders, but the stable price is the premise to ensure the orderly production of the industry.

According to nearly two days of research, after the Sino US meeting, the price of domestic Xinjiang cotton has been raised, and most of the enterprises are concentrated on the trade enterprises which are highly related to futures. For example, last week, Xinjiang's machine picked cotton price was priced at 14300 yuan / ton, and the current price is 14400-14500 yuan / ton. Fixed price sales enterprises cautiously wait for futures trend. The current trend of turbulence is still difficult to determine whether the price adjustment. In addition, according to the feedback from Xinjiang regulatory and futures delivery banks, there has not been much improvement in the export of lint in the territory. There are more enquiries at present, but the order is still hesitant. Compared with Xinjiang cotton, the purchase and sale of imported cotton also seems to be in a "bottleneck" period. Because of the uneven quality of goods entering the port, it is unfavorable for the downstream businesses to pick up the goods. Some cotton traders originally intended to make clear the direction after the G20 summit, and then operate. However, according to the current market trend, we still can not make decisive decisions, and we also need to continue to wait and see.

For the most advantageous position of the reserve cotton business, although the turnover rate was maintained at 100% in the past two days, the average price was 13426 yuan / ton on Monday, up 433 yuan / ton compared with the previous trading day, and the average price of 13247/ tons on Tuesday was 179 yuan / ton on the previous day, and the price of auctions also declined.

On the whole, the outcome of Sino US meeting is good, but the improvement of the macro level to the cotton textile industry is limited. At present, industry participants can follow up operation in a timely manner and reduce product inventory in a relatively favorable period. Sino US trade consultation is still a "protracted war". We should make the best preparations, prepare for the worst, enhance the ability to resist risks and meet the challenges of the market.