The strong rebound on June 10 and predication on longs lacking confidence

4. The strong rebound on June 10 and predication on longs lacking confidence
The uncertainty of the rebound in Jun is relatively large, as the consumption is needed to verify. The rebound is seen after the de-stocking of yarn market has some effects and Sino-US trade relations tend to ease somewhat before the G20 Summit.

After G20 Summit, the macro economy indeed shows some good news, but the consumption for cotton is not recovered quickly, and according to its speed, the overall commercial inventory will still be higher compared to the corresponding period of last year before the arrivals of new cotton. Downstream market has not improved much, especially grey fabric market. Meanwhile, cleared foreign cotton prices under sliding-scale duty are higher than the current imported cotton that has been cleared, which means that there is no chance for mills to use sliding-scale duty quotas, and 800kt of sliding-scale duty quotas may be delayed to be used. Meanwhile, the monthly cotton imports are large in recent months, and cotton imports may keep good, as Brazilian cotton inventory is ample and new cotton has arrived, and intensive arrivals of Australian cotton will see as well. Cotton inventory in bonded areas is heard to be large, to reach 400-450kt in general. Mills may have no demand to procure forward shipments, so the new buying from China to the international cotton is expected to be weak. In short, the cotton market lacks upward momentum and the uncertain macro economy will influence the market.