Yarn cost conduction is poor, the cotton market lacks further upward momentum

 First, look at the new forecast data. April USDA monthly supply and demand report shows that global cotton production decreased slightly by 91,000 tons to 21.729 million tons, including India's production of 5.835 million tons, remains the global cotton producing countries; global consumption increased by 82,000 tons to 23.86 million tons, of which China's consumption was revised upward by 109,000 tons; global ending stocks decreased by 245,000 tons to Global ending stocks decreased by 245,000 tons to 22.255 million tons. In addition, China's production and imports maintained last month's forecast, with consumption revised up by 109,000 tons and ending stocks revised down by 109,000 tons, with all the reduction in ending stocks coming from the upward revision of consumption; China's new year production of 5.182 million tons and consumption of 7.076 million tons, with a production and sales gap of 1.894 million tons, excluding imports of 1.089 million tons there is still a gap of 805,000 tons. Pakistan's consumption increased by 109,000 tons, thus causing an increase in imports of 131,000 tons, the rest of the countries have no significant changes in the indicators, the new year global cotton supply is still loose, but has begun to go to stock.

　　The next focus of analysis of the cotton market changes in the past two weeks.

　 　The wave of cotton market started before the spinning enterprises raw material inventory has been relatively low, inventory of about 1-2 weeks, the futures first in the funds boosted by the launch of the rise, resulting in the spot became relatively sought-after, the proportion of upstream orders default increased, a variety of price increases in sales, resulting in traders sales profits improved, most traders reflect the current "bottom, no bargaining ", gradually a bit of the taste of the seller's market, such a situation is still a few years ago the big bull market will appear over.

　　Second, driven by the rise in futures, cotton spot transaction prices this week rose about 100 ~ 300 yuan / ton, with the day before yesterday's night market rose sharply, several enterprises raised prices 200 yuan / ton, Xinjiang Corps cotton prices raised 500 yuan / ton sales, but the downstream gauze is not obvious, the price did not move, the inventory is high.

　 　Third, the recent spinning enterprise finishing profit also changed, from the previous loss into a profit of about 300, nearly turned back into a loss, mainly upstream lint price increases, resulting in increased costs, but the downstream spinning yarn did not increase prices or that the cost of conduction failure. At present, spinning yarn by the impact of imported spinning yarn, price conduction is more difficult, with the domestic period spot price increases, foreign yarn imports or re-emerging, will then impact the domestic market.

　　Fourth, the day before yesterday afternoon the Development and Reform Commission convened the relevant departments, in response to the recent domestic cotton futures prices rose abnormally to study the issue, the meeting made clear that the 2015/16 year reserve cotton will be put to protect market demand, in the case of market needs, in the original 2 million tons on the basis of the placement can increase the amount of placement, in addition to also involving the quota discussion, the previous policy of not issuing additional slip tax quota may be based on Market supply and demand situation to readjust, the market long for off-course funds, may have misread the news of the Development and Reform Commission.

　　Fifth, it is understood that the reserve cotton selling price is in accordance with the weighted price of the internal and external price index for weekly pricing, a week to adjust, at present, as futures prices climb, the weighted price of the internal and external index has risen more than the spot increase, although the reserve cotton has a discount of 600-1400 yuan / ton, but the relative competitive advantage of the price weakened, the attractiveness of the receiving party decreased.

　　In short, with the recent rise in domestic cotton futures prices, spot lint prices up 200-600 yuan per ton ranging from the downstream spinning line cost conduction is not seen to raise prices, coupled with the arrival of the market consumption off-season, the late cotton market lacks further upward momentum.