Global deflation has gradually made the cotton market worse

Recently, the break of US$45/bbl in international oil prices has occupied an important position in various media and financial websites. Many famous economic analysts and experts in the world have expressed their opinions on the sharp drop in oil prices, and the sharp drop in oil prices has begun to make the market frantic.

The relationship between the continued decline in oil prices and the cotton market seems to be unmatched, but careful analysis can reveal that the plunge in oil prices has had a major impact on cotton prices. There is already an existing between “Energy Exalted” and “White Fumei”. Inextricable relationship.

"The drop in oil prices will definitely affect the prices of downstream cotton products. Many downstream products in the crude oil market and the downstream products in the cotton market are in competition with each other. Can you say that oil prices have nothing to do with cotton prices?" said Shandong Cotton Trader Li Ying. What is important is that the sharp drop in oil prices is changing the market’s expectations of economic trends at home and abroad, and the external environment of the cotton market will undergo major changes.

Since the international oil price dropped from US$100/barrel to US$90/US$80/barrel in succession in late June last year, until the current break below US$45/barrel, the market generally believes that the direct result of the downward oil price will be It is a global economic deflation. In the context of weak global economic growth, the domestic cotton market, which depends on exports to drive demand, will certainly be sluggish.

Wu Faxin, general manager of Guangzhou Aisha Import and Export Trade Co., Ltd., Greater China, said that the textile industry is not optimistic about the market. Due to economic turmoil, coupled with the lack of long-term orders, the enthusiasm of coastal apparel export companies to purchase cotton yarn is very low, while the Spring Festival holiday The approach of the company also does not allow companies to keep too much inventory. The domestic cotton market basically does not have an important bullish factor.

According to the survey, the current global cotton market is in excess supply, and the domestic cotton market will have a surplus of around 12 million tons in the current year, which is equivalent to domestic consumption of more than one year. The January monthly supply and demand report just released by the US Department of Agriculture shows that as the world’s largest consumer of cotton, China’s cotton demand is continuously weakening, while US cotton production is still increasing, and the export volume of major cotton producing countries in India is increasing. Cotton supply is expected to increase.

"Supply, inventory, and weak demand, coupled with the plunge in international oil prices have extinguished the hope that the market will rely on export growth to drive higher cotton prices, and the weak domestic cotton price pattern will be difficult to change in the short term." Li Ying believes that the domestic cotton market is currently Adding to this, it is better not to have the idea of ​​rising cotton prices before this spring.

At present, the domestic cotton and cotton yarn market is light and weak. Downstream companies generally take a wait-and-see attitude. Although some downstream manufacturers do not have high production turnover inventory, they are still very low in their enthusiasm for stocking. It is also known that with the Spring Festival holidays approaching, cotton enterprises’ funds tend to be tight, and ginning factories and textile companies are not uncommon for the phenomenon of lower prices, which adds to the psychology of the market to bearish on cotton prices.

According to the statistics released by organizations such as the Cotton Association, the acquisition of seed cotton has basically ended, and the Xinjiang Cotton has accelerated the speed of dispatching to the Mainland, and has formed no small impact on the cotton market in the Mainland. As the implementation plan for the Mainland's cotton subsidies has not yet been announced, some farmers in Hebei and Shandong still have a large stock of seed cotton that has not been sold. As the price of lint continues to decline, many ginning factories are unable to achieve a smooth sales price, and some cotton enterprises that have not achieved sales in the previous period have incurred losses.