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The better anticipation on macro aspect may lead to the recovery of consumption
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The better anticipation on macro aspect may lead to the recovery of consumption

Views:0     Author:Site Editor     Publish Time: 2019-07-08      Origin:Site


The better anticipation on macro aspect may lead to the recovery of consumption, and the influence of cotton supply structure change on consumption shall be noted. Especially at present, reserved cotton is the best choice for spinners to make profits, and orders tend to transfer to scaled enterprises, then the reserved cotton that with smaller quantity will move to scaled enterprises gradually. Cotton prices may tick up shortly, while the uptrend will be supported by the fundamental finally. The recovery of cotton products is the key.

Therefore, if cotton prices go up faster than yarn, it is not good to consume cotton.

According to USDA’s Acreage Report, all cotton planted area for 2019 is estimated at 13.7 million acres, 3 percent below last year. Upland area is estimated at 13.4 million acres, down 3 percent from 2018. American Pima area is estimated at 275,000 acres, up 10 percent from 2018. The harvests of 2018/19 US cotton have limited influence on the market, and currently, the 2019/20 US cotton planting areas and yield will mainly influence the ICE cotton futures. According to USDA, the sowing areas of upland cotton are projected to reduce by 80,000 acres, below 30kt, which poses little impact on the market. Later, pay attention to yield.

Summary
The good news at the weekend gives the upward momentum to cotton prices, but it still needs time for downstream market to follow up, which is related to the consumption of cotton. The consumption is expected to reduce, and cotton market needs de-stocking. Currently, it is expected that cotton prices may push up and then fall down periodically.

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