Four Major Reasons For November, Chinese Buyers Signed A Large Number Of US Cotton.

According to the statistics of the US Department of agriculture, the United States signed a net contract of 78 thousand and 300 tons of Upland Cotton in 2019/20 on November 2019 1-7, an increase of 109.8% over last week. The main countries contracted were Pakistan (26 thousand and 500 tons), China (18 thousand and 900 tons) and Turkey (10 thousand and 400 tons). China accounted for 24.14% of the total 2019/20 cotton signed in the United States during the week, and 1126 tons and 5330 tons in the previous two weeks suddenly increased to 18 thousand and 900 tons.

As of November 7th, the 2019/20 cotton land cotton signed a total of 2 million 243 thousand and 900 tons of export, representing an increase of 6.3% over the same period last year, reaching 64% of this year's forecast, regardless of the volume of exports or the export progress is much higher than the average of nearly five years.

From the feedback of several international cotton traders, importing trade enterprises and textile enterprises, China signed so many contracts in the first week of November that 2019/20 cotton exceeded expectations. After all, compared with Pakistan's 2019/20 cotton production and quality decline, Turkey, Vietnam and other countries were all "non cotton producing countries and totally dependent on imports", China's cotton stocks were relatively high at the beginning of the year, cotton production and quality were relatively stable, cotton consumption stabilized and resumed for a long time. More importantly, although Sino US trade negotiations had made some progress, the first stage of the agreement was slow to sign. Enterprises started "marketization" to buy cotton, and some of them had to pay attention to avoiding risks.

The author analyzed the reasons for the large number of Chinese buyers signing the US cotton on 1-7 November.

First, there is a strong expectation that China and the United States will sign a phased agreement and cancel each other's tariffs before the end of December. Of course, in order to avoid risks, most of the procurement contracts clearly stipulate that "if the import tariffs of the United States and Canada have not been abolished, the buyers and sellers have negotiated delay in performance, unconditional cancellation or even breach of contract", so the actual quantity of shipment and delivery is a variable that may be adjusted at any time.

Two, taking into account the shipment date of 2019/20 cotton, a few Chinese cotton textile mills "overdraft" in 2020, 1% tariff import quotas "pre procurement" high quality machine picked cotton, shipment and delivery generally in 2020 1-3 months;

Three, the trade war with China and the United States has eased up and delayed each other, raising tariffs. Some developed countries such as Europe and the United States have dropped orders or returned from Southeast Asia.

Four, since December 2nd, China started to open 500 thousand tons of high-quality New Zealand cotton. Traders and textile enterprises are worried about the tight supply of high quality cotton harvester and cotton prices in 2019/20. There is a plan to lock in SM and GM grade cotton resources in advance.