资讯 1 10 英文网 297 Monthly 590066 CNCotton Monthly Report (Nov) 2019-11-20 14:20:09 yangfang
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CNCotton Monthly Report (Nov)
2019-11-20

Government’s decision to procure Xinjiang cotton failed to boost cotton price. Cotton market is still dominated by slowing world economy and uncertain U.S.-China trade talk that restrain cotton consumption and lead to a weak price rise. Meanwhile, harvest and ginning in the northern hemisphere is reaching peak, and domestic production loss is below expectation. Considering the government purchase and trade dispute, we expect more developments to be watched in the longer term market. Near term, cotton price should stay flat with a higher bottom. 

  

The recovery of textile industry is currently slow and export demand faces uncertainties. Domestic cotton yarn experienced a bit of recovery since October, driven by rising domestic cotton price and a seasonal pick up in textile orders. However, this is far from the traditional golden months in the past, considering a poor cotton yarn, poorer cotton fabric and the poorest textile and garment. 

  

By November 8, ZCE cotton futures gained 7.74% from the end of September. Physical cotton gained 1.51%. This compares with a 0.97% increase in cotton yarn and even a decline of 0.04% in cotton fabric. Narrowing cotton/yarn spread and yarn/fabric spread resulted in a fall in gross margin. In October, garment sales by medium and large enterprises fell 0.8% year on year and textile and garment export easing 1.67% from a year ago. Garment export dropped 5.92%. As reserve procurement begins in December, domestic cotton price is likely to receive some boost but textile and garment export remain shaky. 

  

Xinjiang production loss below market expectation. Reserve buying to help maintain a steady market. Low temps in June and July caused cotton harvest Xinjiang to be delayed by 7-10 days. With an increased planting and 53% harvested, it is still early to project the decline.  

  

Data from NCMMS shows that, Xinjiang cotton production is pegged at 4.974 mil tons, down 2.5%, which is well below the rumored loss of 20-30%. Government has decided to purchase 500,000 tons of Xinjiang cotton from December. This should help reduce harvest pressure. The maximum price which will be determined based on market conditions should provide stability to cotton market and maintain a healthy industry. Cotton price is likely to stay afloat or become firmer.