Zheng Cotton Is Already At The End Of Its Strength.

In mid June, Zheng cotton's main contract hit the previous high point, and the 1101 contract closed for three consecutive days.

At the same time, cotton spot prices continued to rise. The 22 day average price of CNCotton B on behalf of the mainland standard grade cotton was 17910 yuan / ton, up 287 yuan / ton before the Dragon Boat Festival, or 1.6%.

The continuous rise of spot and futures market deviated.

International cotton market attacks

Recent international cotton market bad news.

First, the recent US cotton export volume is lower than market expectations.

In June 17th, USDA released the US cotton export report from June 4th to 10. When the shipment date was 2009/2010, the net export volume of US cotton was 66 thousand and 600 tons. The result was 53% lower than the previous week, and 11% lower than that of the previous four weeks, much lower than the market expectation.

Second, in June 18th, the government of India announced that it would completely remove its cotton export restrictions from October 1, 2010, including exports and 3% export tariffs.

Unofficial estimates of cotton production in India will reach a record high of 5 million 440 thousand tons in 2010/2011, which will greatly increase the export supply in the new year.

Finally, the US meteorological department recently predicted that the precipitation in major cotton producing areas in the United States will benefit cotton growth in the future. Meanwhile, the India meteorological department predicts that the monsoon rainfall in India will also benefit cotton growth this year.

In addition, from a technical point of view, the 16 US cotton contract in December failed to rush at 80 cents, then the volume fell and began to turn downward.

State regulation is high.

After the Dragon Boat Festival, rumors of throwing away the store are endless.

Whether the rumor is true or not, the government's close attention to the current high cotton price is beyond doubt.

In the current era of high cotton prices, large and medium-sized textile enterprises or small and medium-sized textile enterprises that are able to cope with relatively insufficient financial strength are miserable.

The author believes that the government will not allow domestic cotton prices to skyrocket due to the purpose of protecting the textile industry.

At present, due to the tight supply of cotton in China, cotton producers are optimistic about the future market.

The rumors that the state may introduce regulatory measures, even if it can not cool down the "reluctant sale" of the spot, has also been cautious in the procurement of textile enterprises. The atmosphere in the cotton futures market has also been greatly affected.

The government's attention and regulation on cotton price is an important factor affecting Zheng cotton at present.

In June 19th, the people's Bank of China announced that it would further promote the reform of the RMB exchange rate formation mechanism and enhance the flexibility of RMB exchange rate.

A textile industry has said that the net profit of the textile industry will drop by 1 percentage point per appreciation of one percentage point, and the average profit margin of the textile industry is only 3% - 5%. The appreciation of the renminbi is compared to the last straw of the camel.

Objectively speaking, the reopening of RMB exchange rate reform is a neutral plan, which is not equivalent to the appreciation of the renminbi, but this has added some variables to the export situation of Chinese textiles.

domestic

In order to cope with the rapid rise of cotton prices and ensure the late use of cotton, many textile enterprises increased procurement efforts in May and replenish inventory.

According to the national cotton market monitoring system survey, in early June 2010, the national cotton industry inventory level has increased.

As of June 7th, the average daily use of cotton in the sample survey was 39.6 days, an increase of 3.1% compared to the same period, an increase of 36.8% over the previous year, an increase of 8.3% over the average in the past three years.

With the completion of phased replenishment, the enthusiasm of textile enterprises to purchase raw materials is weakened.

The purchase intention survey showed that the proportion of enterprises preparing to purchase cotton decreased from 77% in May to 68% in June, and the proportion of wait-and-see attitude increased from 23% in May to 30% in June.

In summary, the author believes that the current cotton market is still long and short messages coexist. Before the new cotton listing, the situation of high grade cotton supply and demand is unlikely to change, which will continue to support the spot price of cotton.

However, it is difficult for the futures market to break through the previous high point, because the measures or expectations of the government to regulate cotton prices as a key factor affecting the Zhengzhou cotton market will continue to suppress the atmosphere of Zheng cotton. Zheng cotton is already at the end of the battle. It is easy to fall and rise.