Cotton Supply Is Tight &Nbsp In The New Year; Cotton Prices Are Running At A High Level On The Basis Of More Fundamentals.

In August, the price of the US cotton rose steadily, rising nearly 10% in the month. At the same time, although the price of Zheng cotton has been under pressure from the selling of state cotton and cotton, it has gone out of a sharp rebound, while domestic spot cotton prices have dropped steadily. Overall, the current global and domestic cotton market fundamentals are still excessive, and the cotton (information, market) price has played a good supporting role, estimated cotton prices will remain high in the late stage.

New year Cotton market supply Still tight

In the first two cotton years, as the output of major cotton exporters in the United States and major consumer countries shrank sharply, the global cotton market was over consumed, especially in the Chinese market, which was largely consumed by hidden inventories, which kept cotton prices in 2009/2010 market bullish, and this situation is expected to continue in 2010/2011.

From August to the United States Ministry of Agriculture According to the monthly supply and demand report released, the US cotton production in 2010/2011 is expected to increase by 1 million 380 thousand tons over the previous year, the output of cotton in India increased by 540 thousand tons, and the global cotton output increased to 3 million 200 thousand tons. However, due to the global consumption increase of 690 thousand tons, the inventory in the early 2010/2011 period dropped by 2 million 820 thousand tons, so that the global end inventory of 2010/2011 dropped to 9 million 930 thousand tons, a new low in recent years. At the same time, although the US Department of agriculture forecast that China's cotton production is 7 million 180 thousand tons and Pakistan's output is 2 million 60 thousand tons, due to bad weather and flood damage, there is no great hope for China and Pakistan's cotton production to reach this level. In addition, due to the good performance of domestic downstream market, we can not rule out the possibility of increasing demand in later stage. In short, the supply of global cotton market will remain tight in the new year.

US cotton prices continue to rise

Over the past month, the US cotton price has continued to rise. First, American cotton. Export sales Good offset the supply pressure caused by the expected increase in output. It is understood that by the week of August 19th, the signing amount of cotton in 2010/2011 reached over 1 million 100 thousand tons, nearly 1/3 of the total output of the US cotton, far higher than the 420 thousand tons of the same period last year, and the contracted sales of more than 100 thousand tons for two consecutive weeks. The good signing sales volume not only greatly relieved the pressure of the US cotton production increased by 1 million 380 thousand tons this year, but also accelerated the processing progress of the cotton harvest earlier this year to the end of this year.

Second, since July, the fund has sharply reduced net clearance. From the position report, since July 16th, after a short two weeks' speculative headroom rate remained at 2.3% to 2.7%, 3 weeks later, the net rate of speculation was over 12%. The reason is that the poor performance of the nearby agricultural products (000061 shares) and the industrial products market has made the speculators vigorously increase the number of cotton holdings and exceeded the market expectations. Eventually, the price of US cotton to China's main ports rose to 98 cents / pound from mid July to the end of August, and the conversion to Hong Kong quotas from the 15500 yuan / ton at that time increased sharply to 17900 yuan / ton (August 27th quotations). The price at the sliding tariff rate was 86 yuan / pound. In October, the prices of high-grade cotton, Australian cotton, India cotton and Central Asian cotton increased to 100 cents / pound, and the conversion price to HK was over 18000 yuan / ton under the sliding duty tariff rate.

Domestic cotton production is not optimistic.

Because of the long time of low temperature weather in May, the growth of cotton in China was slower this year. Then, in the middle and late 7 months, cotton entered the reproductive growth stage, and some areas experienced many years of high temperature weather. The cotton pollination was affected, causing some flower buds to fall off, affecting the rate of peach sitting. In August, the rainy weather continued to rot.

Judging from the expected output of new cotton in parts of Hebei, Shandong and Henan, most of them are not as good as last year, and the output of areas with better conditions is also lower than that of normal year 20%. According to some cotton growers, 7 and August are the critical period for cotton growth, but due to overcast rainy weather, cotton lodging and rain soaking, bud and boll shedding are more, and Cotton Boll Rot appears recently. The yield of seed cotton has been reduced, the reduction will be around 20%, and the quality is not optimistic.

At present, there are signs of bumper harvest in Xinjiang cotton area. However, most farmers predict that the yield per unit area of cotton seed will not be higher than that of previous years. The main reason is that cotton growth is uneven in some areas, cotton peaches are smaller than in previous years, and many cotton fields are not covered with peaches. At the same time, due to the increased planting area of jujube trees, the area of cotton planting has been reduced, even if Xinjiang cotton has increased its yield per unit area, and the total output of local cotton has not been effectively improved.

Recovery of downstream enterprises is better than expected

Since the beginning of the year, the export of cotton textiles has exceeded the expected growth. The export value has reached a record high in the past two months, and the recovery of the export business is beyond imagination. In areas such as the Yangtze River Delta, the Pearl River Delta and other export enterprises, after the financial crisis, "factory rush orders" became "traders rob factories". Due to the low volume of orders for traders in 2009, the main reason for the sharp increase in orders in the first half of this year was replenishment.

After a tumultuous period, with the replenishment of foreign trade in the second half of the year coming to an end, export orders for enterprises also began to return to reason. But the "Christmas order" started at the end of August has made the foreign trade warmer, and has basically stabilized at the level before the financial crisis in 2008. From the recent situation, the European order situation is very good, especially the German economy has taken the lead in recovery, and the volume of orders exported to Germany has increased most recently. At the same time, the bargaining power of many export enterprises has also been improved. Taking advantage of the order warming up, the cost will be transferred to downstream customers. In addition, a number of export enterprises with scale and technological advantages have increased the added value of profits through product upgrading, thus eliminating the risk of exchange rate fluctuations and rising costs.

New cotton purchase price is expected to run high

Judging from the current situation of sporadic listing of new cotton in various parts of the world, the purchase price of seed cotton is maintained at around 3.9 yuan / kg, because most of them are inferior to peaches, and their grades are relatively poor, and the quantity is very limited, and their representativeness is insufficient. But if we calculate according to this price level, and then take into account the cotton growers' expectations, the purchase price of new cotton will be high this year, and the market will probably fall into a stalemate pattern at the early stage of purchase.

The sale of State Cotton stores has made the spot cotton price show a stable and stable operation pattern.

As of August 27th, the state recently planned to sell 600 thousand tonnes of national cotton reserves to 200264 tons in the market. The actual turnover was 199265 tons, with a turnover rate of 99.5%, and the 33% of the plan was completed. The average grade of all cotton stocks was 3.68, the average length was 28.33, the weighted average price was 17811 yuan / ton, and the turnover price of 328 grade cotton was 18115 yuan / ton (net weight). During the sell-off of national cotton stores, the selling price in August 19th dropped sharply by 1095 yuan / ton, and triggered a deep downward exploration of Zheng cotton price in August 20th, and made up for the gap in August 13th of the previous week. Subsequently, the selling price of national cotton and cotton sold steadily strengthened, and the price of Zhengtian cotton rose correspondingly. It is also understood that since August 25th, the proportion of grade 3 cotton in the sell-off of national cotton reserves has dropped significantly, and the transaction price has remained stable. According to the schedule, the 600 thousand tonnes of national cotton and cotton dump will probably be in mid 10, when the new cotton has been listed, and cotton prices can basically achieve a smooth transition.

To sum up, due to the low grade of cotton that can be sold in the short term and the guarantee of supply, the domestic cotton spot price is expected to remain stable and weak in the short run. However, in view of the high cotton prices in the previous year, cotton growers generally expect higher prices for new cotton, and the purchase of new cotton will fall into a stalemate pattern. The downstream market has already accepted the current cotton price after the early sale of the red hot scene, coupled with the general expectation that the market will not produce enough products for the new year. The high cotton price situation is expected to continue.