Recently, the price difference between domestic and foreign cotton continued to be deeply inverted. After the recent sharp rise of international spot price with New Zealand Futures, it was close to 6000 yuan / ton. Both the inverted range and duration were only in 2010 / 11.

From the perspective of the reasons for the continuous expansion of the upside down range, in addition to the fundamental differences in the logic of supply and demand in the domestic and foreign markets, namely, the tight supply and strong demand outside China and the slack domestic supply and demand, there is also a very important reason that the RMB exchange rate against the U.S. dollar has continued to decline significantly, which has greatly increased the cost of imported cotton, The price difference between domestic and foreign cotton will be further widened.

We can also see from the change track of the difference between domestic and foreign cotton prices that this year is to verify the saying that "laws are used to break".

We have experienced that it is impossible for us to improve the acceptance ability and willingness of the downstream through time; We also see that the deep inversion of the price difference between domestic and foreign cotton will break the expectation that the domestic cotton transaction will turn better. Because under the situation that domestic demand suffers from the impact of the epidemic and the use of Xinjiang cotton in export orders is limited, the significance of relative price advantage gradually disappears. On the one hand, the current price difference is difficult to make the import cotton with poor transaction worse, Of course, it can't pull the domestic cotton deal better.

In this regard, we maintain the early domestic and external cotton market deviation will continue to be expected.