From A Family Point Of View: The Voice Of A New Round Of Adjustment In The Cotton Market Is Rising Again

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At the beginning of June, domestic and foreign cotton futures rebounded from the low point adjusted in late May, while after the Dragon Boat Festival, the market of matchmaking cotton, including matchmaking cotton, began to decline, market A new round of adjustment has begun.

I cotton Re analysis of dumping and storage: possible transformation of risk

We believe that the current market adjustment is mainly based on the rumors of selling and storing, which is also the biggest risk of the cotton market. According to the data, the total amount of national cotton reserves is less than 1.2 million tons. Recently, it is rumored that the country will sell 600000 tons of cotton at a limited price. We believe that from the perspective of price convergence between the new and old years and cotton purchase in the new year, there is a certain possibility of dumping storage. By selling some resources every day, we can limit the participating enterprises to last for two or three months, which will affect the market psychologically. However, the possibility of reverse results still exists. Once the country sells 600000 tons, the reserve will be significantly lower than the normal requirements. How to supplement the reserve resources when the output is expected to shrink in the new year? At the same time, it is necessary to be alert that under the high market sentiment, once the negative selling and storage is released, there will be a periodic negative vacuum period, and the price may rise sharply.

2、 This year cotton New feature of inventory: transfer from middlemen to textile enterprises in advance

In the process of cotton price rising from 14000 yuan/ton to over 18000 yuan/ton this year, spot purchase and sales continued to be strong. When the market maintains a firm view on the tight supply of resources, as long as the enterprise has sufficient funds and has normal production or higher profits, active procurement will be the only choice for enterprises. In fact, this has been the case this year.

At present, the distribution of cotton market inventory has changed a lot compared with previous years, that is, middlemen have inventory, but they are no longer dominant. At present, cotton resources in the market are purchased in advance by a large number of powerful textile enterprises. It is conservatively estimated that some large textile enterprises can store cotton for about three months, or even at a higher level, and can basically connect with the new flower listing. Therefore, we believe that under the current situation, even if the cotton price declines, there will not be centralized selling by middlemen in the past years, which will greatly depress the market price.

3、 The capital and profit of downstream cotton mills are the factors that determine the inflection point of cotton

The profit of downstream textile enterprises this year is very considerable: even if the current cotton price is higher than 18000 yuan, because the sales of downstream textile enterprises continue to improve, the textile price continues to rise. At present, the price of 32S yarn has exceeded 29000 yuan, and the yarn mill can still maintain a profit of more than 3000 yuan/ton.

Therefore, for the future market development, from the perspective of the transmission of the industrial chain, the cotton price will reach the inflection point only when the cotton mill sales are in trouble, the price starts to decline, and the enterprise capital chain is difficult to support the stage of continuing to buy high priced cotton with cash. Otherwise, supply and demand concerns always outweigh price concerns.

4、 Purchase price of cotton in the new year

After the main contract of Zheng Mian was transferred to 1101 contract, the focus of the market began to turn to the cotton output and purchase price expectations in the new year. The next policy formulation of the country will also give more consideration to the smooth transition of prices in the New Year, taking into account the interests of all parties.

However, judging from the weather in April and May this year when the seedlings were planted, the survey on the planting area of China's cotton this year, and the weather forecast in the later period, it is difficult for China's cotton output in the new year to reach the level of last year (the National Bureau of Statistics estimates 6.4 million tons), and the new flowers will be listed about 15 days later than in previous years. The purchase price in the new year may hit a record high, 4.0 yuan/kg may not be a high price, and the purchase cost is expected to exceed 16000 yuan/ton, or even higher. Therefore, the weather and policy will be the focus of attention in the later period.

5、 Cotton supply in the new year: China's gap has substantially expanded, and the increase available internationally is limited

At the end of this year, the supply of cotton in the new year has become the focus of the market. We believe that China's cotton output will be lower than last year's level of 6.4 million tons, and the increase of American cotton available to the international market will be about 300000 tons. This is due to the fact that the later growth of American cotton is completely smooth (focusing on the 2010 crop planting area report released by the U.S. Department of Agriculture on June 30), and India's cotton export policy for the new year is fully liberalized, It is also difficult to exceed the export volume of 1.3 million tons this year, and other countries have not changed much.

6、 Conclusion

Based on the analysis of the above aspects, we believe that the market adjustment caused by the rumors of dumping and stockpiling is more phased. Once the bad news is exhausted, the cotton price may rebound in retaliation. Given the tight supply and demand on the fundamentals, don't talk about the change of direction of cotton. It will be a good time for strategic positions to be built below 16500 yuan/ton for far month contracts. For contracts in recent September, you can pay close attention to the arbitrage opportunities in the future.