The Global Economy May Double Dip&Nbsp; Cotton Prices Are Unlikely To Be Strong In The Later Period

Recently, the information of cotton dumping and storage and quota is sometimes absent, and the yarn price cannot bear the off-season market, showing a small downward trend. Although the cotton spot market has been in a stable state, the market procurement has continued to wait and see, and the cotton futures market has also continued to decline. The economic recovery is not obvious. At the same time, the cotton output in the new year may improve, the arrival of the off-season market and other factors are expected to make it difficult for cotton prices to rise in the future.

1. The international economic situation may be threatened by a "double dip"

According to the following chart, we can see that the American ISM manufacturing industry The index has rebounded from the bottom since 2009, and the market has gone up all the way. However, in the past two months, the index has shown a slight downward trend. The index stopped at 60 points, and this month it stopped at 56.2 points, down 3.5 points month on month. The change of the non-agricultural employment population in the United States has shown a decreasing trend since January 2008. Although after three sharp rebounds, the market began to be optimistic about the future, but the economy is still fragile, and the non-agricultural employment population decreased by 125000 this month. In addition, the US unemployment rate index has been hovering at a high of 9.5% since June 2009. As of June 26, the number of people applying for unemployment benefits for the first time increased by 13000 to 472000, and the unemployment rate is still at a high of 9.5%. The number of non farm payrolls has decreased, and the downward trend of manufacturing continues. The unemployment rate has been at 9.5% for a long time. The pessimistic data from all aspects has hit investors' confidence. This month, the American Consumer Confidence Index in June released by the American Economic Consultative Conference Chamber fell nearly 10 points month on month, to 52.9. As the most important economy in the world, the uncertainty of the economic recovery in the United States will intensify the market's concern about the "double dip" of the economy, which will bring greater resistance to the upsurge of Zhengmianyi City.

2. RMB appreciation is unfavorable to textile export

Since the start of the exchange rate reform of the RMB, the RMB has been fluctuating, and the RMB has shown an obvious upward trend against the US dollar. In half a month, the central parity rate of the RMB against the US dollar rose from 6.8275 on June 18 to 6.7790 on July 6, up 485 basis points, up 0.71%, and repeatedly set new highs since the exchange rate reform on July 21, 2005. Among them, the maximum daily increase was 295 basis points and the maximum daily decrease was 122 basis points. The spot market also rose rapidly. On July 6, the closing price of RMB against the US dollar was 6.7749, 525 basis points higher than the closing price on June 18, an increase of nearly 0.77%. As a major exporter of China, the United States has launched the reform of foreign exchange, and the appreciation of RMB against the US dollar will be detrimental to textile exports. According to the research, for every 1% appreciation of the RMB, the sales profit rate of the textile industry will decline by 2% - 6%, and the clothing industry with high export dependence will suffer more. For the textile industry with low profits, the appreciation of RMB will make its profit space compressed again.

　　3、 cotton Sufficient inventory and strengthened national policies

According to the provincial and scale sampling survey of cotton enterprises, by the end of June 2010, the total commercial inventory of domestic cotton was 1.9 million tons (including foreign cotton and cotton in circulation, excluding national cotton). The plan for dumping and storing 600000 tons of cotton quota has been approved and can be launched at any time. Based on the monthly consumption of 800000 tons of cotton, as of the listing of Xinhua, the total available inventory of textile enterprises is 2.5 million tons, which can fully support the listing of Xinhua. July September is the traditional textile off-season, the demand for cotton will be reduced, and the cotton gap will be successfully solved. In addition, in view of the possible delay in the listing of new cotton this year, the state has made preparations for regulation and control of import, dumping and storage. At the same time, the state will also adopt a series of supporting regulation and control policies to ensure the market supply of cotton.

4. Increase in cotton planting area, and cotton output may be improved

According to the crop planting area report released by the US Department of Agriculture at the end of June, the US cotton planting area is expected to increase by 19% in 2010/11. At present, due to favorable weather conditions, US cotton is growing well (as of June 27, the budding rate reached 48%, while only 29% in the same period last year), and the market's expectation of US cotton yield has increased. The official statistics of India also performed well, with the sown area of new flowers growing by nearly 20% year on year in 2010/11 as of June 24. The cotton output in West Africa is expected to increase by 15-20% in 2010/11. In addition, the planting area of Brazilian cotton has been relatively stable, and the unit yield is steadily increasing. The cotton output in Brazil is expected to increase to 1.4-15 million tons in 2010/11. Although China's cotton planting area has stabilized at last year's level, the total output is expected to increase by 11%. At the same time, the increase of cotton planting area in India, the United States, West Africa and other regions will also bring more resources to the domestic cotton supply. The pressure on cotton growth is not small.

　　5、 Cotton price High, not attractive compared with viscose short and polyester short

Cotton, polyester staple fiber and viscose staple fiber are the three main raw materials of cotton textile industry. The three compete, replace and support each other. High cotton prices will increase the use of polyester staple fiber and viscose staple fiber. The high price of chemical fiber will block the falling space of cotton. At present, the market price of 328 grade real estate cotton is about 18300-18500 yuan/ton. At this time, the price difference between polyester staple fiber and polyester staple fiber is about 9000 yuan, while the price of 1.5D * 38mm viscose staple fiber is around 18500 yuan, which is equivalent to the price of cotton. Generally speaking, it is normal for cotton to be 2000-3000 yuan higher than polyester staple, and it is also normal for viscose staple to be 4000 yuan/ton higher than cotton. However, the high price of cotton is not only much higher than polyester staple, but also the difference between viscose staple and cotton staple is almost 0, which will push cotton prices down to stabilize the price difference between the three.

Looking at the trend of viscose, cotton and polyester staple in recent years, we found that this strange phenomenon only occurred in December 2008 and April 2009, when the price of cotton and viscose was almost the same, and the difference between cotton and polyester staple was around 4000 yuan. Why? At that time, it was the hardest time of the financial crisis. In order to seize the already depressed textile market, viscose and polyester staple sold at a lower price. At that time, the price of cotton was relatively high, which was the result of the state's purchase and storage. Now, the turmoil of the financial crisis is receding. Although the viscose staple fiber and polyester staple fiber markets are not outstanding, driven by high profits, many textile enterprises have joined in the production of all cotton yarn, which has also led to the reduction of demand for polyester staple fiber and viscose staple fiber. However, with the dumping and storage process, the price of all cotton yarn has declined and other factors, It is unlikely that cotton will remain high.

6. Cotton yarn is no longer rising and starts to slow down

Since July, the off-season has played an important role. There is a slight opportunity of decline in the stability of the cotton yarn market. The bullish sentiment of cotton spinning enterprises has begun to cool down. Some small factories have taken the lead in taking preferential measures, and the transaction price is 300-500 yuan/ton lower than the actual quotation. In addition, the purchase enthusiasm of the cotton yarn market also began to be depressed, and the market generally reflected that the transaction was insufficient, and the inventory began to increase. The high price of cotton yarn also caused many enterprises to choose TR yarn, pure polyester yarn, polyester cotton yarn and other alternatives. The rise of cotton yarn will no longer drag the cotton spot market upward, and the weak demand for cotton yarn will also reduce cotton consumption.

In addition, Textile clothing According to the latest statistics from the General Administration of Customs, China imported 94000 tons of cotton yarn in May 2010, down 8.7% month on month; The import amount was 254 million US dollars, down 7.7% month on month. In May 2010, 58200 tons of cotton yarn were exported, up 10.55% month on month, and the export value was 239 million dollars, up 11.74% month on month. In the same month, China exported 681 million meters of cotton cloth, a 0.36% month on month decrease; 75 million meters of imported cotton cloth, a 7.66% decrease on a month on month basis; The net export volume was 600 million meters, up only 0.76% month on month. In addition, the export unit price is not obvious. Compared with the same period in 2008, the cotton yarn unit price in 2010 increased by only about 10%, and even compared with the relatively low price in 2009, the increase was less than 20%. Compared with the domestic cotton yarn price, which increased by more than 50%, the survival conditions of cotton yarn enterprises have not improved, and the profit space has been further compressed.

In a word, the cotton price has reached the high point since 2003. However, with the strengthening of policy regulation and the good expectation that cotton output will improve, in addition, with the slowdown of international economic growth, the effect of off-season and other factors, the probability of continuing to rise is small.