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Industry News | Time: May 25 2017 4:18PM
[11th China Hangzhou Cellulose Fiber (Viscose) Industry Forum]Outlook for global and China's cotton market
 
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Li Zhenhua, Senior analyst from CCFGroup, gives his speech
Outlook for global and China's cotton market


Mr. Li fisrt introduced the general features of cotton market. As an agricultural product, cotton supply presented seasonal features, while demand was stable. Domestic cotton planting areas decreased year-by-year in recent 5 years. The proportion of Xinjiang-origin cotton increased.

Secondly, he analyzed the cotton supply and demand situation. China’s cotton imports reached 121kt in Mar, and totaled 373.9kt in the first quarter of 2017. There are 118 trading days in plan for state cotton auction. Trading?volume?of?reserved?cotton and the prices have relation with market sentiment, while planned selling volumes of Xinjiang cotton could weaken this impact. In the first 43 trading days, trading volume was about 22kt per day. Currently, apparent commercial inventory is largely historic high warehouse receipts, which total 280kt and most of which are Xinjiang-origin cotton with higher price than that of standard warehouse receipts.

Thirdly, he analyzed the financial features of cotton. It is in inverse proportion to overall commodity futures.

Fourthly, he forecast that original and speculative demand will increase, and alternative demand will recover as well.

Fifthly, he elaborated the contradictions in international cotton market. For US cotton, transition and connection between contracts are the keys to the contradiction between high spot price in this year and expectations of output growth next year. For Indian cotton, cosumption and demand are stable but there're black box-like features affecting the market.

Lastly, he forecast that cotton market is more likely to sustain range bound in the latter half year.

[RISK DISCLAIMER] All opinions, news, analysis, prices or other information contained on this report is provided by analyst of Zhejiang Huarui Information Consulting Co., Ltd (CCFGroup) as general market commentary and does not constitute investment advice. CCFGroup will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
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