After The Market Bubble Burst, The Market Is Not Optimistic

The market which was hyped up by funds and news in the first two weeks turned into nothing. It was like a big bubble suddenly burst. After only a month of excitement, just out of the "golden nine silver ten", some cotton enterprises, small and medium-sized cotton textile enterprises, trading companies, etc. reflected that the situation began to change, and the production and marketing situation "changed faster than turning over books.". As of November 6, cy c32s cotton yarn closed at 21230 yuan / ton, down 570 yuan / ton or 2.61% in a week.

For more than a week, domestic cotton sales were significantly weaker than in October, and raw material prices continued to weaken. As of November 6, the cc3128b cotton index closed at 14593 yuan / ton, down 48 yuan / ton from the same period last week. Judging from the current operating conditions of textile enterprises, due to the sharp rise of cotton price and cotton yarn price in October, the loss of processing profit of textile enterprises has been greatly narrowed. At present, the loss is about 500 yuan / ton. Based on the cotton inventory 20 days ago, the processing profit is still positive, and in extreme cases, it has reached 2500 yuan. However, as we all know, before October, the overall market was poor, and textile enterprises themselves were in the process of de stocking. Naturally, cotton did not have a lot of inventory. In mid September, there was a small wave of procurement, but it was still near a relatively low level. Therefore, only a small number of enterprises were destined to receive dividends in this wave of market. Most enterprises could barely maintain cash flow, and their life was not very good.

In the half month since the middle and late October, the cotton yarn futures price has dropped from 22260 to 20630 points, down to 1630 points, or 7.32%. The sharp decline in futures prices has a serious impact on the spot sales of cotton yarn. Spot sales price drop does not say, the most important thing is that sales slowed down significantly, goods are not smooth, cotton yarn began to accumulate, spinning enterprises inventory inflection point appeared. As of November 5, China's yarn inventory index closed for 12 days. Spinning enterprises cotton yarn inventory overall or not high, no business pressure. However, inventory is an important factor that affects the mentality of textile enterprises. There is a huge difference in the quotations of textile enterprises in different regions. One of the factors causing this phenomenon is that some textile enterprises are not willing to reduce their prices due to their low inventory. However, most textile enterprises are still in the early stage of production orders, and many are still full capacity production. As for the later stage, although there are some orders, downstream prices are also very demanding. Textile enterprises can only be cautious to accept orders, but also according to lint inventory, cotton purchase costs, profit objectives and other factors, to undertake a profit-making order.

As for the downstream grey fabric market, although the total cotton grey fabric inventory is at a low point in nearly three years, the start-up has not increased significantly. The reason for this situation is that the actual orders are not fully communicated to the consumer side. In this wave of market in October, most of the inventory transfer has been transferred to the gray cloth traders. The orders at the terminal are limited. It is the soaring raw materials and short-term shortage of supply that have led to the surge of cotton yarn and grey cloth, as well as the scramble of traders. In fact, the traders misjudged the situation and accepted the offer.

Internationally, no matter from which perspective, the current election of the United States has always been a "grey rhinoceros" for China's cotton textile industry. No matter whether trump succeeds in re-election or Biden's "top position", China will still be regarded as an economic opponent, and the policy of continuing to exert provocative pressure on China from trade, politics, military and other aspects will not change, and Sino US relations will continue to move forward in the "fight without breaking". In order to achieve the so-called trade balance and reverse the trade deficit, the US side will still press China to import American agricultural products, including cotton, through various means. The only difference is that if trump is re elected, because the first phase of Sino US trade agreement is his greatest political achievement, the second and third stages of trade negotiations may continue to advance, but at the same time, the cotton ban in Xinjiang may also "return". In this regard, if Biden is elected, in order to fight against President twitter, he is likely to "cut" the agreement. However, due to the strong opposition of the Chinese government before the cotton ban in Xinjiang, it is likely to abolish it in order to step by step. However, don't be too happy too soon. Biden may change the "map gun" mode that trump started in the world before he was elected. Instead, he will unite the offended countries to jointly suppress or even replace Chinese goods. At that time, it will not be a good thing for China's textile and garment enterprises with large employment population, strong competitiveness and large export base.