On August 3, the reporter conducted an in-depth interview with Hong Honghua, general manager of the Cotton Textile Industry Service Center of Yangtze Futures Co., Ltd., on issues such as the development trend of cotton prices in the new and old years in Hubei on the operation of the cotton spinning industry.
Reporter: What do you think are the main factors affecting the current rise and fall of cotton prices?
Hong Honghua: The current market is intertwined with long and short factors, and the influencing factors mainly lie in four aspects. First, high inventory and low consumption. Global inventories have risen for three consecutive years and will continue to increase next year, with supply seriously exceeding demand. At the same time, consumption has not been consolidated, but continues to decline. The most core factor in the current period is the epidemic. The global epidemic control has worsened than previously thought, which has lengthened the pace of consumption recovery. As long as the foreign epidemic is not well controlled, whether the prevention and control is active or passive, it will affect consumption; Second, the macro monetary environment. At present, the world is flooded with water, and China is also implementing a proactive fiscal policy. Monetary easing and infrastructure development are very beneficial to the overall financial environment for commodities; third, Sino-US relations. The impact of Sino-US trade friction has begun in 2019, resulting in a decline in consumption of millions of tons. Some production capacity has been transferred to Southeast Asia. If Sino-US relations continue to not improve in the future, production capacity will continue to be transferred, resulting in a decline in consumption. ; Fourth, the new year’s output. From the current point of view, the United States is reducing production, but the weather in the United States has improved recently. India’s production increase is expected to increase, Brazil’s production is bumper, and Xinjiang’s production is basically the same. Compared with last year, global production has not changed much in terms of production reduction. Later production still needs attention. On the whole, the fundamentals of cotton are relatively weak. At this time, the downstream industry has entered the off-season, external demand has been relatively weak, and overall consumption cannot be afforded. But one thing is that the cold winter of consumption has already been touched. In the later period, the world will be in the process of recovery, and it will only get better step by step. The market’s expectations for a gradual improvement in future consumption have always existed. The most noteworthy thing is that due to global monetary easing, global stock markets and commodities are currently rising strongly, which has brought a better investment atmosphere to the market. Most varieties have experienced a wave of brilliant prices. As for cotton, the increase is weak and the market is also weak. It has embarked on an objective trajectory and needs to wait for new opportunities to make breakthroughs.
Reporter: From an industrial perspective, have gauze production and sales in the downstream market improved month-on-month?
Hong Honghua: The production and sales of the downstream gauze market have not changed. First, it is still in the off-season, and second, the recovery of external demand is slow. Domestic yarn mills are currently operating at a loss and are thinking of continuing to reduce production. The operating rate of cloth factories is declining, inventories continue to increase, terminal consumption is not strong, and the downstream industry is still in a weak state.
Reporter: The current foreign trade situation is grim, especially Sino-US relations are full of uncertainties. Can the export market return to normal levels in the future?
Hong Honghua: From the current point of view, the export market will not return to normal levels, because during the Sino-US trade friction in the past 1-2 years, some external orders have been transferred to Southeast Asia. In the future, Sino-US relations are still full of variables, which will have a continuing impact on future external demand. Of course, the marginal impact of the ongoing friction in Sino-US relations over the past two years is weakening. In terms of exports, the impact of the epidemic is relatively pessimistic now, but it will gradually improve in the future. However, it is difficult to return to the previous normal level. On the one hand, it is the negative impact of various economic and trade relations, and on the other hand, the textile industry continues to shift to Southeast Asia.
Reporter: How is the cotton growth situation in Xinjiang, and what will be the change in output?
Hong Honghua: The weather conditions in Xinjiang this year are still very good, and it is generally suitable for cotton growth. However, some areas in northern Xinjiang are experiencing drought due to less snow in the Tianshan Mountains, while southern Xinjiang has rainy weather. Influence. Aphids, cotton thistles, and verticillium wilt are more serious in northern Xinjiang, and some places are suffering from drought. However, aphids and verticillium wilt have receded around July 20, and the unaffected cotton fields are expected to be highly productive. This year’s yield will vary greatly depending on management level and whether there are pests or diseases. Of course, these impacts are within a tolerable range. It is expected that Xinjiang’s cotton output this year will be slightly reduced compared to last year due to the slight reduction in planting area, drought, insect pests and epidemics.
Reporter: Under the current fundamental conditions of supply and demand, when will cotton prices start a trend upward trend and why?
Hong Honghua: Due to the impact of the epidemic this year, the ending inventory has accumulated more, while the production volume has not dropped, and the demand has not increased significantly. Instead, it continues to decline. It is expected that cotton prices will be difficult to show a trend in the short term. Sex Rising Quotes. As mentioned before, cotton needs to wait for opportunities. First, it takes time to destock, reduce production, and then reach a balance point; second, we need to pay attention to when the foreign epidemic situation will be clearly controlled, and consumption will have a rapid recovery process; third, the global economy has recovered rapidly, and consumption has Fourth, whether the country’s reserve policy adheres to short-term “rotation” or adopts a long-term mechanism for flexible changes.
Reporter: In the new cotton year, what do you think is the operating range of cotton prices?
Hong Honghua: We are cautious about the cotton market in the new year and expect the price to fluctuate in the range of 11,000-14,000 yuan/ton with a high probability. why? The absolute value of consumption this year is similar to that of 2014/15, when the average cotton price index was 13,900 yuan/ton. The lowest historical cotton price was in 2015/16, with the annual average of 12,900 yuan/ton, 2016/17, 2017/18, and 2018/19 are the years with the best consumption. The average prices are 15,700 yuan/ton, 15,900 yuan/ton, and 15,100 yuan/ton respectively, so I think 13,000-14,000 is under great pressure. The bottom space is limited due to planting costs and the darkest moment has already occurred in March, and it will not get worse later.
Disclaimer: The opinions, conclusions and suggestions in this article are for reference only. </p
