Fabric inventory is accumulating in China though the operating rate has been cut. Feedstock inventory in weaving plants is at a four year low. With better anticipation and higher feedstock prices, speculative inventory or processing will increase, which is good for the upstream market. The Zhengzhou cotton futures market rebounded driven by the lower trading proportion of reserved cotton, the narrower price spread between domestic and foreign cotton, the lower yarn inventory and the release of sliding-scale duty quotas. Inquiries and sales of imported cotton have improved somewhat. In the short run, the price spread between domestic and foreign cotton is still likely to narrow.

The good news from the Sino-US trade negotiation was favorable for the international market. Though previous tariffs have not been cancelled, and no confirmed agreement was seen, the news was still good for the industry. Especially at present, reserved cotton is the best choice for spinners to make profits. Orders tend to transfer to scaled enterprises. Cotton prices may tick up shortly. The good news at the weekend gives an upward momentum to cotton prices. The downstream market still needs time to follow up, which is related to the consumption of cotton. Consumption is expected to reduce and the cotton market needs de-stocking. Cotton prices may rise and fall periodically.