Daily Commentary on Cotton (7.9): Prices Retreat

US cotton rose slightly. US cotton traded lightly on Friday, closing slightly higher, the market watching, US cotton exports are light, investors wait for the USDA monthly report released this week. December contract 70.62, up 4 points, 9th is the last trading day of the July contract. According to the USDA, as of the week of June 28, the United States signed a net contract for export of 19,006 tons of upland cotton this year, with a shipment of 47,423 tons; the net contract for the next year is -431 tons of upland cotton. In the week, China signed a net contract of 3,493 tons of land cotton (11,800 tons newly signed, 8,301 tons cancelled). This year, the total number of US cotton contracts signed was 2.71 million tons, and 2.23 million tons had been shipped.

Prices continue to fall. China's CPI in June fell to the "2 times" year-on-year, and hit a two-and-a-half year low. The PPI was negative for the fourth consecutive month. Inflation continued to be the reason the government relaxed its monetary policy to provide more space, and also explained the reason why the central bank cut interest rates twice in one month. According to data released by the Statistics Bureau on Monday, China’s CPI rose by 2.2% year-on-year in June, and the growth rate continued to slow, basically meeting expectations. Economists said that if monetary policy continues, if the economy continues to decline, it does not rule out that it will cut interest rates once again, but mainly based on quantitative tools. Ba Shusong said that considering that the CPI may moderately rise to about 3% by the end of the year, there is little room for further interest rate cuts. From the perspective of **occupation, there is more room for adjustment. Producer prices continued to decline, and the producer price index (PPI) fell by 2.1% in June from a year earlier, which was higher than the 1.4% decline in May.

The spot is stable, and the enterprises in Xinjiang plan not to collect it. From May 5th to the 9th, the prices of Xinjiang tertiary cotton in warehouses in Shandong, Jiangsu and Henan were stable at 18,800-19,000 yuan per ton, secondary cotton was stable at 19,100-19,300 yuan per ton, and the Corps lint was 200 yuan higher than local T, but the use of cotton enterprises and traders did not actively purchase Xinjiang cotton, some cotton mills can accept Xinjiang three cotton in 18000-18500 yuan / ton. The weather in the cotton areas of southern Xinjiang is relatively good. The growth of cotton is basically the same as in previous years. Some cotton enterprises estimate that they can open the scale on September 1-10. Most of the ginning think that the 2012/13 domestic domestic cottonseed and lint market is still “high before and after low”, and it is wise to not snatch up the lint and not to store lint and resolutely disregard cotton sales to the mainland market. It should wait until late October. Even in November and then choose the machine to open the balance, fast processing and fast storage. The yarn price was stable and the turnover was low. Recently, the cotton mill stopped production and production reduction was obvious. Manufacturers' prices were little changed, and the decline was not obvious. However, the actual demand was stagnant and weak. It was difficult to conceal the weakness, and the manufacturer’s price was no less lacking. The 21s, 32s, and 40s on the Qianqing market in Shaoxing had no electricity. The mainstream price of Jie is 23,500 yuan/ton, 24,500 yuan/ton, 26,000 yuan/ton, 32S is high, and the mainstream is 26,000 yuan/ton, and there are also some manufacturers who take the low price. 32s combing mainstream is 29,000 yuan/ton, 40S. Combing mainstream 30000-30500 yuan / ton. On the one hand, the upper reaches of the cotton market are stable. On the other hand, since the mills have reduced their output since March and April, they have stopped production in June and their social inventory has fallen.

The prime minister said that the downward pressure on the economy still exists and that house prices will never rebound. Wen Yu pointed out during his investigation in Jiangsu from July 6th to the 8th that the overall economic operation of China is stable, but the downward pressure remains high. It is necessary to further increase pre-adjustment and fine-tuning efforts and adhere to the implementation of proactive fiscal policies. In particular, we must focus on improving structural tax reduction policies, continue to implement prudent monetary policies, effectively solve the structural contradiction between supply and demand of credit funds, and focus on improving the pertinence and forward-looking policies. Sex and effectiveness. He also said that the current real estate market regulation is still in a critical period, the control task is still very arduous. We must unswervingly do a good job of regulation and control, and regard the suppression of real estate speculative investment demand as a long-term policy. And stressed that house prices should never be allowed to rebound.

Wang Qishan said that it is still imperative to ensure that economic growth and employment increase. At a recent meeting in Suzhou, State Council Vice Premier Wang Qishan said that the current global economic situation is still severe and complicated, and all countries are facing different challenges. The top priority is still to ensure economic growth and employment increase. Under this situation, China must first manage its own affairs well. Since the beginning of this year, China’s economic operation has been generally stable. We will firmly grasp the overall tone of steady progress, put steady growth in a more important position, speed up the transformation of development methods, adjust the economic structure, and strive to maintain stable and rapid economic development.

Zheng cotton shrank. On the 9th, Zheng Cotton opened lower and quickly lowered to 19340 at the beginning of the session, gaining buying support or recovering, maintaining a narrow range of weak volatility, and continuing to move within a narrow range after midday. 1209 closed at 18725, up 30 points from the previous trading day, and 1301 closed at 19490, up 15 points. On the same day, the total turnover of 191,000 hands, compared with the previous day increased 9356 hands, holding 490,000 hands, reducing 11,000 hands.

Today, Zheng cotton is in shock. According to statistics from the Bureau of Statistics, the year-on-year increase in CPI fell back to a two-and-a-half year low in June, and prices fell significantly, in line with expectations. The central bank unexpectedly cut interest rates last week. Economic data was intensively introduced this week, and the sharp fall in CPI has aggravated the market's concerns about poor data. Industrial products tend to differentiate. The strong performance of other agricultural products led Zheng Cotton to pull up slightly in midday, and the overall range is still oscillating. The spot of domestic lint is stable, and the textile enterprises have to reduce production to cope with the price of light yarns. The stability of the spot and the expectations of purchasing and storage limit the space under the Zheng cotton, the market is currently not optimistic about the second quarter of GDP, temporarily watching or short-term operation, concerned about the arbitrage opportunities of 01 and 05.

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