Market Dynamics: The External Market Continues To Decline, And The Cotton Market Price Follows The Pressure

The overnight ICE cotton continued to decline, dragged down by the decline of weekly export sales data and the strengthening of the US dollar, offsetting a slightly positive supply and demand forecast report. Due to the significant drop of foreign cotton, Zheng Mian followed the pressure operation, and now the main contract continues to be weak and volatile. In terms of domestic fundamentals, downstream demand needs to be continuously followed up. At the same time, with the arrival of new flower planting season, weather and other topics will receive more attention.

According to Zhongtai Futures, the trend of the domestic cotton market is stronger than that of the international cotton market. However, with the sharp decline of the American cotton price, the difference between the internal and external cotton prices shows that the import profit has increased, resulting in an increase in import expectations. The Ministry of Agriculture and Rural Affairs of China raised the estimate of China's cotton import in 2023/24 to 2.3 million tons, which was estimated to be 2 million tons in March. The ending inventory was raised to 7.32 million tons, which was estimated to be 7.02 million tons in March. At present, the domestic cotton supply is sufficient, but the inventory has begun to decline, but the spot delivery has not been significantly increased, and the cotton sales progress is slower than that of the previous year. According to the data of the national cotton market monitoring system, as of April 6, the national cotton sales rate was 56.6%, down 12.4 percentage points year-on-year. Yarn inventory rebounded, and cotton procurement performance was slightly less motivated.

As for the evolution of the market logic, Maike Futures said that the rise of the US dollar, coupled with the loose supply of new cotton, suppressed the trend of ICE cotton, and the cost of imported cotton fell back, making the domestic cotton price meet pressure with the external market. However, due to the purchase of clothing in summer, the order has improved, making Zheng Mian more resilient than the outside market, and paying attention to the guidance of planting area. Zhongtai Futures said that the periodic supply was loose, the demand was still expected, and the sharp drop of foreign cotton slowed down the trend of Zheng cotton, which was a shock finishing operation.