Since the fourth quarter of 2018, due to the expected decline in consumption, Zheng cotton futures prices continued to pull back, the lowest contract of 1905 contract reached 14,650 yuan / ton, currently fluctuating around 14,900 yuan / ton, the lowest cost of warehouse receipts is 14600 - 14800 yuan / tonne.
The industrial chain is still in a weak position
At present, domestic textile and apparel domestic sales have experienced a phased slowdown, combined with domestic and foreign forecasting institutions to judge the overall downward growth of China's GDP growth in 2019, expected 2019 The domestic textile and apparel domestic sales situation is generally poor. From January to October 2018, the export of textiles and garments performed well, and it deteriorated in November. Under the influence of Sino-US trade friction, the growth rate of China's textile and garment exports will face a downside risk in the future. Due to the slowdown of domestic and foreign sales, the finished goods inventory of textile and apparel began to gradually accumulate in July 2018. Cotton stocks reached their highest point since 2009 in mid-November 2018, and the speed of destocking was slow. The cotton yarn stock of the textile enterprise is relatively high, and it is still in the process of selling and destocking; the raw material cotton is replenished or nearly completed, and the downstream orders have not improved significantly. The operating rate is lower than the same period of the previous year. Overall, the cotton industry chain is still in a weak position.
This year's reserves will be reduced
Since 2016, China's reserve cotton has been inventories for three consecutive years. The current reserve cotton has reached the safe inventory position, and the reserve cotton that was released in November has been rounded out. The announcement was lost in November 2018. At present, the sliding tax quota has been issued, and the sliding rate is lowered, which is conducive to the promotion of imports, so the long-term supply gap is narrowed. It is expected that the cotton throwing reserves will be reduced in 2019, and the storage time will be delayed or delayed.
On the other hand, due to the contraction of demand, global and Chinese cotton supply and demand in 2018/2019 will gradually shift from tight to balanced. At present, the domestic supply side presents a bottom-up situation. After three consecutive large destockings, the reserve cotton has reached the safe inventory position, and the de-library speed has slowed down. On the demand side, domestic cotton consumption has rebounded for three consecutive years, and it is a year of decline in consumption in 2018/2019.
It is possible to purchase US cotton in China
One of the Sino-US trade talks agreements is that China purchases US agricultural products, and has already purchased soybeans. If the Sino-US trade friction eases, China's procurement scope is expected to expand. Cotton is very likely to be listed. niceThe price of cotton is in a relatively low stage and the cost is relatively controllable. In terms of the number of rounds, according to the National Development and Reform Commission's Document No. 9 of 2016, in principle, it should not exceed 30% of the actual number of rounds in the previous year. The estimated upper limit is about 800,000 tons. As of December 13, 2018, US cotton contracted for 2018/2019 reached 72.3%, and the remaining amount was limited. If China enters US cotton, it is more likely to purchase US cotton in 2019/2020.
In short, the domestic cotton market was weak in 2019, and the marginal negative impact of the economic slowdown is expected to be more pronounced in the first half of 2019. Zheng cotton's annual lows may appear in the first half of the year.
(Author: Guotai Junan Futures)