The demand side is not improving significantly at present, and the basic plane of Zheng cotton has not changed much

Text of research report

(Data pictures are for reference only)

[I. Market Overview]

Zheng Mian (17580, 5.00, 0.03%), the main force of the 2309 contract, had a shock after the opening today. On the fundamentals, many factors restricted each other, and Zheng Mian had a callback. Before the closing, Zheng Mian's final closing price fell 0.74% from the closing price of the previous trading day, closing at 17465 yuan/ton, down 130 yuan/ton.

In terms of American cotton, American cotton opened high and plunged after shocks. Worries about the demand of China, the largest consumer, dominated the market sentiment, offsetting the support brought by the slight decline of the US dollar and the strengthening of the financial and commodity markets. The main contract of ICE American Cotton fell 0.56% to close at 86.87 cents overnight. At present, we continue to pay attention to the subsequent dumping of storage prices and the rush to harvest new cotton. In the short term, the high pressure will fall back.

[II. Macroscopic and industrial news]

1. As of the week of August 27, the boll setting rate of American cotton was 90%, 93% in the same period last year, and the five-year average was 90%, compared with 81% in the previous week. The boll opening rate of American cotton was 25%, compared with 27% in the same period last year. The five-year average was 25%, compared with 18% in the previous week. The excellent rate of American cotton was 33%, 33% in the previous week and 34% in the same period last year.

2. According to the fabric factory, the grey fabric inventory: On August 28, the grey fabric weaving inventory was about 35.8, and the fabric stock in autumn and winter improved, and the weaving manufacturer's shipment increased, so the grey fabric inventory fell slightly.

3. China Reserve Cotton Management Co., Ltd. is scheduled to sell 12000.203 tons of reserve cotton, a total of 31 bales, through the national cotton trading market on August 29.

4. On August 28, 2023, the central reserve cotton wheel listed 12000.3929 tons, and the actual transaction volume was 12000.3929 tons, with a transaction rate of 100%. The average transaction price was 17909 yuan/ton, 289 yuan/ton higher than the previous day, or 18358 yuan/ton at 3128 yuan, 174 yuan/ton higher than the previous day.

5. From January to July, the total profit of industrial enterprises above designated size nationwide reached 3943.98 billion yuan, down 15.5% year on year, of which the textile industry dropped 20.3%, 3.5 percentage points narrower than that from January to June, and the narrowing is still obvious.

6. As of August 18, 2023, Pakistan's new cotton market volume in 2023/24 has reached 327900 tons, significantly ahead of previous years; The textile mill purchased 288300 tons; 7700 tons of unsold new cotton.

7. As of the week of August 26, the total cotton harvest progress in Brazil (98.5%) was 78.4%, an increase of 10.2% compared with the previous week, 15.4% behind the previous year. The lag of Brazil's cotton harvest progress narrowed, but it was still slow.

8. As of August 27, the cotton boll setting rate of 15 major cotton growing states in the United States was 90%; The level of the same period last year was 93%, about 3 percentage points slower than that of the same period last year; The average level of the same period in the past five years is 90%, which is the same as the average level of the same period in the past five years.

[III. Data Chart]

[IV. Analysis and Strategy]

In terms of external market, ICE cotton futures fell overnight, and the crop weather in Texas, the United States, still brought considerable pressure, which remained the main focus. The net export sales of cotton in 2023/2024 in the United States in the current week was 38.900 bales, lower than the net sales of 186.300 bales in the previous week.

In the domestic sector, the turnover of reserve cotton is hot, and the spot trading of cotton is relatively active one by one. The basis turnover is relatively light, and the overall spot market turnover of cotton is still relatively light. The downstream cotton yarn market has not changed much, clothing orders are still relatively few, and the downstream is still dominated by rigid demand procurement.

At the demand end, there is no significant improvement, and the basic level of Zheng Cotton has not changed much. The downstream textile enterprises remain on the sidelines. In the future, we should continue to pay attention to the auction price of dumping and storage, downstream orders, new cotton production, etc. It may continue to fall in the short term.

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