Unsatisfying profit and low inventory

ZCE cotton futures plunged in fortnight, with cotton yarn futures 2305 falling to near 14,000yuan/mt and high-level futures falling by near 1,200yuan/mt. Cotton yarn sales were gradually reduced from last week when downstream mills have just finished first wave of replenishment after Spring Festival and would not make another procurement until new orders increased significantly. On the other hand, market confidence was diminished and many were now wait and see after ZCE cotton futures dropped. Following the decline in sales and cotton prices, cotton yarn transaction prices fell by 200-300yuan/mt last weekend, slower than cotton. Cotton yarn prices are expected to drop in the short term though a sharp decrease is unlikely.