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Since the beginning of August, U.S. cotton prices have continued to rebound, but domestic cotton prices have limited follow-up, and the price difference between domestic and foreign cotton has a historical extreme. From the perspective of supply and demand, the historically high price difference between domestic and foreign cotton is difficult to drive the domestic cotton price to rise significantly. The domestic and foreign cotton markets are operating independently. Although the "Golden Nine" will arrive in an instant, the spinning production capacity of each factory has not increased rapidly, but has recovered slowly., The overall operating rate remains at a low level.

In August, with the sharp rise in US cotton prices, the price difference between domestic and foreign cotton again expanded. According to statistics, the price difference between domestic and foreign cotton reached the historical extreme value of -6378.80 yuan/ton on August 17, which was 3031.96 yuan/ton larger than that on August 1.

Foreign strength: U.S. cotton production in the main producing areas of Texas severe drought production is expected to be significantly reduced.

In the international market, the weather factors of the major cotton-producing countries in the northern hemisphere, represented by the United States and India, are still fermenting. The "confusing" supply-side data enable the market to carry out high-frequency trading on expected deviations. However, USDA monthly report data have made a large-scale reduction in US cotton production, thus the global supply and demand pattern in the new year has changed from balanced production and demand to insufficient production and demand, helping to fuel the US cotton market rebound.

According to the U.S. Drought Monitoring Report, the drought index in Texas, the main producing area of U.S. cotton, is at a high level in nearly a decade, supporting the continued rebound in U.S. cotton prices since July 15, while the August supply and demand report accelerated the pace of U.S. cotton growth.

The August supply and demand report released by the U.S. Department of Agriculture significantly lowered U.S. cotton production, while lowering exports and ending inventories. After adjustment, the U.S. cotton inventory-to-sales ratio dropped from 14.5 percent in July to 12.6 percent, the lowest value since 1925, triggering concerns about tight U.S. cotton supply.

Internal weakness: domestic downstream demand has not seen significant improvement in cotton purchase and sales light.

Downstream demand recovery is still to wait and see, cotton prices rebound difficult this year, by the Russian-Ukrainian conflict, trade frictions, epidemic prevention and control, "Xinjiang-related bill" and other factors, the domestic cotton textile market as a whole continued to be depressed, cotton mills generally face high inventory, tight funds, loss pressure.

At present, the downstream demand is still sluggish, the new orders of textile enterprises are insufficient to follow up, and the products are slowly destocking. According to statistics, the cotton yarn inventory of Shandong cotton spinning enterprises was 54 days in the week of August 18, down 1 day from last Thursday and 31 days more than the same period last year. The cotton inventory of Shandong cotton spinning enterprises can be used for 30 days, an increase of 1 day from last Thursday and a decrease of 10 days from the same period last year.

Although the "Golden Nine" is coming and downstream garment enterprises have received some autumn and winter orders, most cotton mills have not felt the sign of the arrival of the peak season. More importantly, many cotton mills still need to use the peak season to stock in the early stage, and the increase in production capacity can only be determined according to the stock removal situation. Downstream cloth factory order volume is not obvious, cotton yarn inventory high is difficult to drop. With the new cotton market approaching, cotton spinning enterprises purchase cautiously.

Weak: domestic new cotton production is expected to increase significantly in the new year supply will be more relaxed

The overall growth of cotton this year is good. At present, the yield per unit area is expected to increase significantly. It is expected that the yield of new cotton this year will be higher than that of last year. October will usher in the new cotton concentrated listing, supply-side pressure will increase.

In addition, affected by the Xinjiang cotton ban, the marginal impact of Xinjiang cotton products export restrictions there is the possibility of further expansion, cotton consumption is still not optimistic, the domestic cotton supply in the new year will be more relaxed.

Domestically, it is currently in the fifth week of the cotton reserve round. Promoting cotton purchasing and storage is conducive to alleviating the pessimism of the market. However, it is difficult to change the surplus of cotton in Xinjiang with small purchasing and storage efforts. At present, it is difficult to support the spot stock. From July 13 to August 19, a total of 58480 tons were purchased and stored, with a turnover rate of 35.02 and an average transaction price of 15843 yuan/ton.

With the "golden nine silver ten" consumption season approaching, the consumer side of the existence of improved expectations, the current textile enterprises to measure profit recovery, but the lack of downstream orders still hinder the spinning profit large-scale cash, only some areas of spinning enterprises start-up rate rebounded, the downstream finished end of the inventory season to the situation remains to be further observed. New flower annual domestic high yield is expected to be strong, ginning mills in last year's harvest losses, superimposed part of the ginning mill in the hands of the old cotton for sale inventory increased year-on-year, it is expected that this year's cotton scale price center of gravity down the probability of a larger, new cotton after the listing of cotton prices above the pressure is expected to increase. Short-term domestic cotton prices or shock operation.

It is expected that from September to mid-October, that is, before the listing of new cotton, domestic spot cotton prices or shocks will weaken.