The Recovery Of Cotton Market Is Not Obvious, And The Demand Side Support Is Slightly Insufficient

The weekly settlement price of the main contract of cotton futures this week was 13395, with a weekly increase or decrease of -1.33%; The closing price of spot index 3128B was 14963 yuan/ton, up or down by - 0.13% compared with last week; The cotton of the North Xinjiang Production and Construction Corps is becoming more and more rare, and the price is also stronger than that of cotton in other places.

The closing price of the main contract of cotton yarn futures was 19250, with a weekly increase or decrease of -1.48%. Xinjiang Cotton 21/31 level double 29 corresponds to the price difference of Xinjiang Kuji of 900-1400 yuan/ton for the main contract and 1300-1600 yuan/ton for the mainland.

This week, cotton enterprises had a good enthusiasm for sales. The price of some middle and low grade resources gave way slightly. The price of high-quality resources was stable, and the overall market transaction was stable. At present, it has entered the traditional peak season node, the downstream market has slightly improved, and some textile enterprises have started to recover, but overall, the market recovery is not obvious, and the demand side support is slightly insufficient.

It is understood that in the case of orders being placed in autumn and winter, the goods of rotor spinning are relatively well shipped, and the increase of starting rate leads to the relative tension of raw materials. Some textile enterprises saw an improvement in their orders. With the recovery of production and sales, finished products began to go to the warehouse. According to the current Zheng cotton price and cottonseed price (Zheng cotton is about 13500 yuan/ton, cottonseed is about 2 yuan/kg), based on 37% of lint percentage and 13% of processing loss, it is estimated that the opening price is about 5.5-6 yuan/kg.

According to the data of the Ministry of Agriculture of India, as of August 30, India's cotton planting area in the new year reached 11.17 million hectares (167.55 million mu), down about 9.2% from the same period last year (12.31 million hectares, 184.65 million mu), which is the smallest cotton planting area in the same period since 2016/17. Recently, the local areas of Trengana, Andhra and Gujarat have suffered from serious floods, which has greatly damaged the local cotton. Although the official has not yet released the cotton loss assessment after the rain, the new year's output is expected to be lowered.

In August, the PMI of the manufacturing industry was 49.1%, down 0.3 percentage points month on month. The prosperity of the manufacturing industry contracted for four consecutive months, hitting a new low in the past six months. From the perspective of enterprise scale, the PMI of large enterprises was 50.4%, and that of small and medium-sized enterprises was 48.7% and 46.4%, respectively, 0.7 and 0.3 percentage points lower than that of the previous month. The production and operation pressure of small and medium-sized enterprises is still great. Production, new orders, raw material inventory, employees and suppliers' delivery time are all lower than the boom and bust line, which reflects that the overall supply of the manufacturing industry is slowing down, demand and price are both falling, and the de stocking is not over while the price is falling, but the inventory is still increasing, which means that enterprises are rolling up prices. The cycle of de stocking is that the price will reach the bottom first, and then the inventory will continue to decline for several months. The current situation shows that the price war is not over, until the factory price stabilizes, the inventory will decline, and the supply side starts to reduce production, so the price is really at the end.

On the other hand, the high-tech manufacturing industry and equipment manufacturing industry PMI returned to the expansion range in August, which shows the strong resilience of the new energy industry and the strong driving force of exports, and may also be related to the ultra long term special national debt funds to support large-scale equipment renewal. New export orders are being repaired, but orders in hand are shrinking. This shows that domestic orders are quite weak, and domestic demand is still unable to pull. The oil processing and coking industry, non-metallic mineral products industry, ferrous and non-ferrous metal smelting and rolling processing industry and other industries have slowed down significantly, which is an important reason for the synchronous slowdown of supply and demand in the manufacturing market. The non manufacturing business activity index was 50.3%, up 0.1 percentage point month on month.