Sino US Consultations Show Positive Seed Cotton Rapidly Rising

On the 10-11 day of October, the thirteen round of high-level negotiations on Sino US economic and trade negotiations took place in Washington, D.C. The US postponed the tariff of US $250 billion from 25% to 30% in October 15th. China promised to buy US agricultural products worth $400-500 billion, and the trend of trade frictions between China and the United States eased. In addition, Trump also said that China and the United States have reached a "very substantive first stage agreement" and "the second stage agreement will start negotiations immediately". Chinese negotiator Liu He also said that handling Sino US economic and trade relations is beneficial to China and to the United States. We hope that the two sides will work together to promote healthy and stable development of bilateral economic and trade relations. The positive attitude of both countries has improved the market atmosphere both at home and abroad.

Boosted by the good news from China and the United States, Zheng cotton futures opened higher today, with the main CF2001 contract rising to more than 12800 yuan / ton, and confidence in the market has been greatly improved. It has changed the downturn at the end of September. In addition to the positive performance of the futures market, last weekend (12-13 September), cotton prices in most parts of Xinjiang also started to rise, and some areas rose to more than 0.2 yuan / kg.

For this reason, the author summarizes the following reasons: first, the Sino US consultation results exceeded the expectations of some market participants, including the ginning companies in production. Last Friday, the external market rose sharply by 4%, which has already released good news to the domestic market ahead of time. Some ginning mills are also making sure that the price increases will be inevitable in order to win more high-quality resources. Two, the market mentality is improving. After the regiment was restructured, the cotton planting peasant household represented by the Corps of the regiment and the seed cotton were sold to which enterprises to expand to expand the scope of indirect purchase and increase the seed cotton price indirectly. Three, this year, seed cotton scale is lower than 1.6-2.0 yuan / kg last year, especially the processing efficiency of machine picked cotton is still available. Kita Masaki, Kuitun, Wusu and other regions appear to rush to collect income, so as to lock in the proceeds in a short time and increase the price of the purchasing enterprises. Among them, some enterprises in Wusu, Kuitun and other areas, the high price machine seed cotton has reached 5.2 yuan / kg.

At the same time, some spot trading enterprises anticipate futures to rise, in order to timely follow up hedging, and seize the spot contracts signed by the local ginning companies, which also enables manufacturers to speed up the processing rhythm and provide uplink space for seed cotton rising.

With the ferment of Sino US trade, the enthusiasm of the market participants has improved. However, the overall sales pace of domestic yarn and lint spot is not yet fast, and we still need to pay close attention to digestion. In addition, cottonseed prices continue to be explored, and the processing cost of ginning plants will be increased, which will also bring risks to the operation of enterprises. It is suggested that all parties be careful to avoid gambling blindly.