Tight Supply Of Cotton Leads To Strong Spot Prices.

Facing the pressure of the new season cotton market, the futures contracts show a strong near and weak pattern. As of yesterday, 1009 and 1101 contracts were closed at 18460 yuan / ton, 16255 yuan / ton respectively, and the contract price in recent months was higher than that in the far month contract by more than 2200 yuan.

At present, cotton is in the stage of no connection, and the stock and import are the focus of the market.

According to China's cotton net survey data, as of the end of June, the total domestic cotton business inventories amounted to 1 million 900 thousand tons (including cotton and cotton entering the circulation link, excluding national cotton reserves), which was 560 thousand tons lower than the 2 million 460 thousand tons at the end of May.

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There are still more than 2 months to go from the new cotton market. The decrease in inventory and import volume has led to tight supply and the spot price of cotton has been keeping up.

In June, China's cotton price index (CC Index328) was 18309 yuan / ton, up 4.8% compared with May, and spot price of cotton reached a new high.

It is estimated that the tight supply of cotton will not change before new cotton comes into the market, and the spot price of cotton is expected to remain strong.

In June 25th, the China Cotton Association issued an industry warning. The state continued to increase the import quota to 3 million 600 thousand tons, and according to the market demand, we should start the plan of dumping and storing 600 thousand tons at any time.

In 2009, China collected a total of 2 million 720 thousand tons. It is estimated that the current state cotton reserves are between 1 million and 1 million 500 thousand tons. The follow-up can be used for less reserves. Many companies are raising funds to participate in the auction.

After the government increased the quota of cotton imports and the adoption of the plan, the subsequent dumping schedule was delayed.

It is predicted that if we throw the store now, we may be looted by the downstream enterprises, not only can not suppress the rise in cotton prices, but may trigger a rise in stock after bottoming out.

The time and timing of throwing and storing are important links in determining cotton price.

Although the market anticipates that the national macroeconomic regulation and control is expected to increase, it has not changed the spot momentum of cotton, but only caused the current price of cotton to slow down.

Focus on 1009 contract position risk

While cotton spot prices hit a record high, Zheng cotton 1009 contracts remain high, with more than 110 thousand hands, but the current number of registered warehouse receipts is only 277, and 1 warehouse receipts correspond to 20 deliveries of 1 deliveries, plus the effective forecast is all registered successfully, and the actual number of warehouse receipts is 282 (5640 tons).

In the face of 113 thousand hand positions, its virtual disk volume is around 56 thousand and 500 hands (282 thousand and 500 tons), which is 50 times the actual warehouse receipt.

In July 21st, Zheng Shang issued a risk warning: Zheng cotton 1009 contract only accepted short covering insurance, not accepting multi head guarantee, and prohibiting the reverse position.

If the dumping occurs, it will also suppress the formation of bulls and curb the occurrence of more congestion. The post market also needs to pay close attention to the volume and positions of the 1009 contracts.

New cotton production increased sharply, laying the market short

The report on cotton planting area released by the US Department of agriculture at the end of 6 showed that in 2010, the total cotton acreage in the United States was estimated at 10 million 909 thousand acres, an increase of 19.22% compared to 2009, and the output was 18 million 300 thousand packs, an increase of 50% over 2009.

More than half of cotton production has led to a sharp decline in the market. It is estimated that cotton will have a pattern of supply and demand as a whole in 2010/2011.

India is the second largest cotton producer in the world, and local authorities predict that the output of cotton in the new season will increase by 5 - 10%.

The output of cotton in China is not yet conclusive and is expected to change little overall. The US Department of agriculture estimated that the output of new cotton in China increased by 1.5% in July.

New cotton will start listing after October, and the reduction of US cotton stocks and the tight supply situation in China will not be solved until October. However, a significant increase in global cotton production has been determined.

The tight supply situation will expand to supply balance and supply, and the short market structure will be gradually formed.

The growth of cotton is pressing against the market.

The United States Department of Agriculture released this week's crop growth report. In the week ending July 18th, the US cotton growth rate was 68%, up from 66% in the previous week and 45% in the same period last year.

The US national average buds rate is 86%, 4% higher than last year, higher than the average value of 8% in recent five years, and the current bell rate is 41%, which is 11% higher than last year, 7% higher than the average in recent five years.

Cotton growth in the United States is far better than last year. Cotton growth in the southern US is almost perfect, so the US Department of agriculture predicts that its output target will easily be achieved.

Although the growth of cotton in the Yangtze River Basin and the Huaihe river basin is affected by floods, the continuous high temperature in Xinjiang, the main cotton producing area of China, has made cotton grow normally.

It is understood that the recent Northern Xinjiang, Wusu, Kuitun, Shihezi and southern Kashi, Korla and other places continued hot weather, the highest temperature is around 36 degrees Celsius, rainfall is scarce, which is conducive to cotton growth.

At present, cotton growth in these areas is relatively normal.

Among them, the topping of cotton in Kashi was basically over, and the irrigation water in cotton fields was adequate. However, there was a certain degree of aphid damage. Cotton farmers were actively spraying and controlling. The water consumption in Korla was better than that in the same period last year.

To sum up, the reduction of cotton production in 2009 led to a shortage of market supply, and the current cotton market is in a phase of severe shortage. The tight supply situation makes the spot price soaring.

But the new cotton production pattern is basically determined. With the advent of the new cotton market in the fourth quarter, the tight supply of cotton will be greatly alleviated, and the long-term cotton market will gradually become weaker. For the 1101 and 1105 contracts of Zheng cotton, the short positions can be established at high positions.