The Tight Supply Price Is Still In The Bull Market Trend.

Domestic cotton spot supply is tightening gradually, and short selling of state reserves is expected to ease supply tensions. Owing to the generally low temperature in 3 and April this year, the delayed planting of cotton and late weather factors have led to a lag of about one month in the past years.

Judging from the trend of Zheng cotton in 5 and June, based on the fact that the supply of basic cotton is in short supply, Zheng cotton price is generally in a strong pattern. Without doubt, with the boost of spot price innovation, Zheng cotton's contracts in the near and far months have increased. After that, they are subject to the policy of stabilizing and retreating part of the increase, such as the resumption of cotton exports and the issuance of 800 thousand tons of cotton import quotas by the NDRC. Recently, the uplink of US cotton has also led Zheng cotton back to the upswing, and the appearance of both sides is rising. Overall, the current macroeconomic and financial environment is still the dominant factor in the commodity market, but for the shortage of cotton, the trend may depend more on fundamentals.

　 First of all, the macro and international situation is mixed.

Abroad, the debt problem of Europe is a sword in the world economy. The consumption attenuation caused by debt reduction in European countries is still not changed. The economic data in the next two months will be more able to illustrate problems, and can show the current situation of the world economy, which deserves the attention of the market. A series of economic data released by the United States on 16 and 17 are disappointing. Investors are worried about the slowdown in the US economic recovery. Despite the fact that confidence in the eurozone market has been boosted by the results of the Spanish bond auction, the outlook for the euro area is still low, so the trend of commodities is hardly optimistic. For the US dollar, the US dollar will not be in the same direction as the US economy for a period of time. The US dollar index has failed to strike 89, and has completed a period of rise. At present, it will maintain a strong adjustment. The lower limit of adjustment will be around 85, and the US dollar will probably oscillate between 85 and 89 in the middle of the dollar.

Domestic focus is on interest rates and exchange rates. Data show that in February this year, CPI has reached 2.7%, 2.2% in March, 2.8% in April, 3.1% in May, plus the need for liquidity recovery and regulation of real estate, raising interest rates sooner or later. Of course, considering the recent international economic situation, interest rate hikes should be postponed. The RMB has been under a great pressure of appreciation, and the United States has raised the issue of RMB exchange rate recently. As China's textile and garment industry has a high degree of dependence on exports, once the RMB appreciates, it will be more difficult for the foreign trade enterprises that have already suffered from the default of EU importers. {page_break}

　　 Second, domestic cotton spot supply is tightening gradually, and short selling of state reserves is expected to ease supply tensions.

At present, domestic cotton spot resources are obviously tight, and many cotton enterprises have no inventory. At present, textile enterprises are hard to buy cotton. On the one hand, resources are scarce. On the other hand, enterprises with more resources are reluctant to ship. Most of the three grade cotton mention prices are reported to be 18000 yuan / ton. Therefore, as cotton prices become higher and higher, the affordability of textile enterprises to cotton prices will be tested. Textile enterprises believe that the price of new cotton will continue to be relatively high this year. Some market participants say that some cotton enterprises have gone to the factory and even signed a 7.20 yuan / kg guaranteed purchase price with cotton growers. This may indicate that the rush buying and buying of new cotton has begun quietly.

Recent textile enterprises survey shows that domestic industrial inventories are only 1 million 200 thousand tons, only enough for 38 days, while traders' business inventories are also very limited. According to the amount of 800 thousand to 900 thousand tons per month, the domestic gap in the new cotton market is 1 million to 1 million 400 thousand tons, which is becoming more and more obvious with the gradual consumption of old cotton stocks. China Cotton Association news, relevant departments in actively coordinating Xinjiang cotton transport at the same time, will introduce relevant regulatory measures to meet textile demand, maintain market stability, and achieve the smooth transition of new and old cotton. The so-called regulation measures undoubtedly refer to the early dumping of the national reserve, but there is still doubt about the amount of time and quantity. However, most of the national cotton reserves are imported into the Xinjiang cotton in the year of 2008/2009, and the quality grades are better. Even if they are sold, the price is unpredictable. Because cotton is an important strategic material, the national reserve must be kept at a certain limit, and with the limited amount of existing reserves, some analysts expect that the reserve will be at 600 thousand tons, and an additional 1 million tons of import quotas will be issued. However, the export of cotton resources in the international market has been limited. Quota issuance can only be used to solve future problems, which may increase the import initiative of textile enterprises next year. At present, the main concern is the quantity and price of dumping.

Owing to the generally low temperature in 3 and April this year, the delayed planting of cotton and late weather factors have led to a lag of about one month in the past years. Taking all these factors into consideration, the tight supply will still be reflected in the new cotton market in August.

Domestic cotton spot supply is tightening gradually, and short selling of state reserves is expected to ease supply tensions. Owing to the generally low temperature in 3 and April this year, the delayed planting of cotton and late weather factors have led to a lag of about one month in the past years.

Finally, ICE cotton adjustment will not change the trend of increase, pay attention to the end of the year USDA planting report.

Due to weaker economic data than expected, triggering market concerns about demand, commodities on the outside market generally fell, ICE cotton new main contract in December after the contract high after a partial increase, the market began to pay attention to the July contract delivery and the end of the year USDA annual report, it is expected that cotton prices will not have much volatility.

The planting area report released in June 30th will update the report on planting intentions in March, and the report will make predictions for the autumn harvest of US cotton output. If the data released in the end of June are not as large as expected, ICE cotton is expected to break through 80 cents and challenge the high point of 87 cents / pound again.

In conclusion, in the context of the policy of the NDRC to crack down on farm products speculation, the high cotton prices will face the pressure of selling national reserves, and the price rise in the spot market will slow down, and the state stores and cotton will enter the market to improve the tight supply situation. In view of the increasing global demand, in the context of tight supply, cotton prices are still in the bull market trend. Under the pressure of dumping and storage policy, short-term investors can focus on buying arbitrage opportunities of 1009 or 1101, and take short contracts in 1101 contracts. They should not sell too much. Investors should still focus on bargain buying. If 1101 or 1105 contracts can be callback to 16000 yuan / ton, they should be a better buying opportunity.