Cotton Issued Under The Chinese Quota &Nbsp; Short Term Impact On The Market More Than Profits.

In the medium to short term, the domestic tight supply situation remained unchanged in the current year, and spot prices continued to maintain a strong trend. The futures warehouse receipts were decreasing. The issuance of tax quota was used to provide hype for ICE cotton. On the operation, we maintained the contract thinking in 7 and September, and 1101 contracts had many uncertain factors.

First, the monthly report of the US Department of agriculture (USDA) in May provides guidelines for the market. This year's supply shortage is expected to continue to the new year.

In May 11th, USDA released the monthly supply and demand report in May. In this year's data, China's cotton production and ending inventory were mainly raised. This month, China's 09/10 production is forecast to be 7 million 76 thousand tons, 218 thousand tons higher than last month, 4 million 320 thousand tons ending, 338 thousand tons higher than last month. The figures in other countries are not adjusted very much, and the global final inventory ratio is slightly higher to 45.5%, which is still the lowest level since 94/95.

Secondly, China's quota issuance will have more impact on the market than in the short term.

It is reported that the two period of 800 thousand tons of slippery quasi tax quotas have been issued in succession. In terms of number, it exceeded the expectation of 500 thousand tons in the market, reflecting the policy intention of ensuring supply in the relevant areas. However, due to the limited export of cotton resources (India cotton has stopped exporting since April 19th, the shipment of the 198 thousand tons of contracted cotton has yet to be resolved. The export of Uzbekistan has reached the upper limit, the United States still has less than 200 thousand tons of resources, and the annual export target can be achieved. The price of imported cotton is high, the US cotton M level is 17800 yuan / ton, and the Australian cotton SM grade is 18000 yuan / ton, which is not only difficult to suppress domestic prices, but also gives the domestic relatively stable cotton price a demonstration effect.

As of May 6th, the latest weekly export weekly data showed that when the signing and shipment reached 59 thousand tons, both sides rose. Among them, the purchasing power of China has been resumed. Since then, it has been contracted for about two weeks for 4000 weeks to increase to 22 thousand and 200 tons.

Finally, despite the overall good fundamentals of cotton, the differentiation of Zheng cotton contract is noteworthy.

Although the pattern of tight cotton supply is basically established in the new year, the uncertainty factors in the macro level must also be taken seriously. On the international side, the debt crisis in the euro area is becoming more and more intense. The tightening policy of domestic real estate regulation as a breakthrough is still no sign of loosening. In the second half of the year, it faces the time window of interest rate and exchange rate policy adjustment. Therefore, under the general weakness pattern of the peripheral market, we should not expect too much of the sustainability of the far month contract under speculative driving. On the contrary, Zheng cotton's 5, 7, and 9 three months' good foundation is more solid. There is no need to talk about the hot spot market. From the futures market alone, last week, the cotton warehouse receipts of Zhengshang merchants continued to decrease by 3880 tons, and now there are more than 54860 tons. Corresponding to the unilateral holding of more than 30 tons in September, the actual market ratio is too low. With the May contract delivery approaching, there will be a large number of warehouse receipts coming out of the market. In September, the contradiction between high positions and low warehouse receipts will be even more prominent. From May 17th's performance, this worry is evolving into reality.