Sino-US Trade and Cotton Textile Market (7.29-8.2)

Release time:

2019-08-07

From July 29 to August 1, the domestic and foreign futures markets operated more smoothly than last week. However, everything was "tranquility before the storm". The last trading day of this week ushered in a big price dive. Cotton and cotton yarn futures varieties fell one after another, with a real-time maximum drop of nearly 4%. On August 1, local time, the three major stock indexes of the New York stock market fell. As of the close of the day, the Dow Jones Industrial Average was down 1.05 percent, the Standard & Poor's 500 stock index was down 0.90 percent, and the Nasdaq Composite Index was down 0.79 percent.

Highlights of the week in review

1. Progress of consultation

From July 30 to 31, the economic and trade teams of China and the United States held the 12th round of high-level economic and trade consultations between China and the United States in Shanghai. In accordance with the important consensus requirements of the Osaka meeting between the two heads of state, the two sides conducted candid, efficient and constructive in-depth exchanges on major issues of common concern in the economic and trade field. The two sides also discussed that China will increase its procurement of agricultural products from the United States according to domestic needs and that the United States will create good conditions for procurement, and the next round of high-level economic and trade consultations is scheduled to be held in the United States in September.

2) Focus on tariffs

In the early morning of August 2, Beijing time, when the US trade delegation had just returned to the United States from Shanghai, trump announced that during the negotiations with China, the United States unilaterally raised tariffs and imposed an additional 10% tariff on the remaining 300 billion of Chinese goods exported to the United States, which will be implemented from September 1, 2019, and said that 10% is only a "small" tax increase, and the existing policy of levying 25% of US $250 billion will continue to be implemented. At the same time, he also expressed the hope that negotiations with China will continue, and the future of the two countries will be bright. Regarding this threat from the United States, State Councilor and Foreign Minister Wang Yi said that imposing tariffs is by no means the correct way to resolve economic and trade frictions!

Market Price Dynamics

This week, from the spot index situation, domestic and foreign cotton, cotton yarn futures contracts showed a steady and then down trend. The settlement price of the domestic Zheng cotton main contract (CF1909) on August 2 was 13044 yuan/ton, down 291 yuan/ton from the same period last week. For US cotton futures (ICE1912), the settlement price on August 1 was 62.37 cents/pound. The settlement price of Zhengzhou cotton yarn main contract (CY2001) on July 26 was 21291 yuan/ton, down 219 yuan from the same period last week. From the perspective of the domestic spot market, on August 1, the domestic 3128B cotton price index was 13450 yuan/ton, which was significantly lower than the previous few days; the price index of 32 cotton carded yarns (CY C32S) was 20800 yuan/ton, and the performance was temporarily Not obvious. Judging from the transaction situation of reserve cotton, the reserve price this week was 13288 yuan/ton, up 61 yuan/ton from the previous week, and the transaction rate decreased. The average transaction price was about 12500 yuan/ton, slightly lower than last week.

At present, market confidence is still insufficient, and peak season expectations have weakened. However, with the development of the Sino-US trade war in one year, the market's response to this has gradually declined. Throughout the past, the plan to impose tariffs has been repeated, and the two sides are still in constant communication. With the successive start of autumn and winter orders, downstream orders will gradually increase, and enterprises should still look forward to the arrival of the "Golden Nine and Silver Ten.

(Source: China Cotton Association)

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