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China's Cotton Gap Expands &Nbsp; International Availability Is Limited.

2010/6/25 11:00:00 24

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At the beginning of June, cotton at home and abroad began to rebound from the low adjustment point in late May, and after the Dragon Boat Festival, there was a drop in the cotton market.

First,

cotton

Parabolic storage and re analysis: possible pformation of risk

We believe that the current market adjustment is mainly based on rumors of dumping and storage, which is also the market's biggest risk for the cotton market.

According to the data, the total amount of cotton reserves in the state is less than 1 million 200 thousand tons, and in the near future, the country will sell 600 thousand tons and sell them at a price limit.

We believe that from the perspective of price linkage between new and old years and the acquisition of cotton in the new year, there is a possibility of dumping and storing some resources, limiting the participation of enterprises for two or three months and affecting the market psychologically.

But the possibility of the reverse result still exists. Once the state sells 600 thousand tons, the reserves will be significantly lower than the normal requirements, and how to replenish reserve resources under the expected reduction in the new year's output? At the same time, we need to be vigilant that when the market sentiment is high, once the stock market is released, there will be a period of negative vacuum, and the price may rise sharply.

Two. New features of cotton inventory this year: pferred from middlemen to spinning enterprises.

This year

cotton

Since the price rises from 14000 yuan / ton up to 18000 yuan / ton, spot purchase and sale continue to thrive.

When the market holds a firm view of the tight supply of resources, as long as the enterprise's capital is still abundant and the production keeps normal or higher profits, active purchasing will be the only choice for enterprises. In fact, this situation has been presented this year.

at present

cotton

The distribution of market inventory has changed greatly over the past years, that is, the middlemen have stock in hand, but they are not the main ones. At present, cotton resources in the market are bought in advance by a large number of powerful textile enterprises. It is estimated that some large spinning enterprises can store cotton for 3 months or even higher, and basically be able to link up the new flower listing.

Therefore, we believe that under the current situation, even if the price of cotton falls, there will not be any phenomenon of concentrated selling of intermediaries in the past years, which will suppress market prices.

Three, the downstream cotton mill's capital and profit situation is the decisive factor of cotton turning point.

Downstream of this year

Spin

The profits of the enterprises are very impressive: even if the cotton price is higher than 18000 yuan at present, as the sales of the downstream textile enterprises continue to improve and the textile prices continue to rise, the price of 32S yarn has exceeded 29000 yuan, and the cotton mill can still maintain a profit of more than 3000 yuan / ton.

Therefore, for the future market development, from the pmission of the industrial chain, only when the sale of the cotton mill is in a predicament, the price starts to go down, and the enterprise capital chain is hard to sustain the stage that the cash price will continue to purchase high priced cotton, and the cotton price will come to the turning point.

Otherwise, the worry of supply and demand is always heavier than price anxiety.

Four, cotton purchase price in the new year

After the pfer of the main cotton contract to the 1101 contract, the focus of the market also began to turn to cotton production and purchase price expectations for the new year.

The next policy formulation of the state will also give more consideration to the smooth pition of prices between the new year and the interests of all sides.

However, from the 4 to May of this year, the weather of planting seedlings, the survey of cotton planting area in China this year and the weather forecast in the later period, it is difficult to reach the level of cotton production in the new year (the National Bureau of statistics is expected to be 6 million 400 thousand tons), and the new flower market will be postponed for 15 days compared with the previous years.

The purchase price for the new year is likely to reach a record high. 4 yuan / Jin may not be a high price, and the acquisition cost is expected to exceed 16000 yuan / ton or even higher.

Therefore, weather and policy will be the focus of attention in the later stage.

Five. Cotton supply in the new year: the gap in China is expanding substantially, and the international supply 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 the output of cotton in China will be lower than that of last year's 6 million 400 thousand tons. The increase of US cotton to the international market will be about 300 thousand tons. This is a consideration of the United States cotton growth in the late stage of development. (concerned about the June 30th Report of the US Department of agriculture's 2010 crop acreage area), India cotton new year export policy is completely liberalized, it is also difficult to exceed the export volume of 1 million 300 thousand tons this year, and other countries have little change.

Six. Conclusion

Based on the above analysis, we believe that the market adjustment caused by rumors of dumping and selling is more gradual. Once the profits are exhausted, cotton prices may rebound.

Under the tight supply and demand fundamentals, do not lightly talk about the change of cotton direction. For the far month contract, 16500 yuan / ton will be a good time to build strategic positions. In September of this month, contracts can be closely watched for arbitrage opportunities.