Zheng Cotton'S Whole Line Is Down, Where Does The Outer Cotton Go?

Since the beginning of August, Zheng cotton has been pulling up the curtain in the vicinity of 17000. As of the beginning of November, it reached the highest level near 34000, with a cumulative increase of 100%. Only a short period of adjustment occurred in September 29th and October 27th.

Yesterday, the whole market down market was affected by the overnight record of the US disk and hit the limit of 6 cents. However, the high position is facing the risk of capital turnover, and the technology overbought pressure accumulated by the profit margin is also the main reason.

Of course, we can not rely solely on the one or two day market to reverse the direction of the market, but there is one point, that is, cotton will inevitably enter the high volatility market in the future, in the short term to fully consider the impact of capital side, we should pay close attention to the next spot market volume and price changes, as well as the evolution of the surrounding market atmosphere, including the next trend of outer cotton.

First, USDA11 month supply and demand report positive effects will not disappear soon.

The US Department of agriculture's supply and demand report in November showed that wheat and corn basically met the market expectations from the main varieties, while beans and cotton showed more profits.

In terms of cotton, China has substantially lowered its inventory of 654 thousand tons at the beginning of this year, lowered the output of 326 thousand tons to 6 million 530 thousand tons this year, and increased the import volume from 436 thousand tons to 3 million 270 thousand tons. At the same time, the United States lowered production and increased exports, ending the end of stock to 479 thousand tons, the lowest since 1925, and the possible trend of China's output is still down.

In addition, China's domestic cotton price is converted to 2 cents at present, while the current ICE cotton stays at 1.5 cents, and the unreasonable price difference between the internal and external market is bound to return to the future.

From a fundamental point of view, the US cotton sales progress exceeds 80%, and since 1925, the low inventory level, China's domestic cotton production decline, grade decline may exceed the market expectations, the two market outlook is likely to go out of the cotton continue to make up the pattern, so as to provide a favorable environment for the launch of the external market.

Therefore, this positive report, including data that may continue to adjust China's output in the late stage, will continue to be reflected in the market.

Two, China's cotton production and grading may exceed expectations, and spot prices will rise from a straight line to an oscillating stage.

The latest official figures show that in 2009, China's cotton output was 6 million 400 thousand tons, and its output decreased by 5% in 2010. It was roughly stable at about 6 million 80 thousand tons, while it was expected to be between 5 million 500 thousand and 5 million 800 thousand tons.

In fact, from our understanding, this year's expected output in Xinjiang was stable or increased, and the situation of stable output in the mainland was broken due to the bad weather around September this year.

Judging from tracking and corporate reflection, cotton production in Xinjiang will probably shrink by about 20% this year, and the total output of cotton in the mainland can hardly exceed 3 million tons. As a result, it is difficult to reach 5 million 500 thousand tons of cotton output in the whole country.

In terms of grade, this year cotton ranks 4 to 5 in the mainland and three in cotton. Xinjiang cotton is concentrated in the 3 - 4 level. In the past, 1 and 2 grades of cotton decreased significantly.

Judging from the latest situation, the price of seed cotton has gone up high this year. At present, it is generally over 6.8 yuan / Jin, and some areas have exceeded 7 yuan / Jin. Even so, the peak of seed cotton purchase has not yet appeared this year.

But in fact, as early as November, the resources of cotton farmers in Xinjiang were extremely limited except for some of the resources left in the mainland, and the market was also expected to significantly reduce output this year.

On the whole, although the domestic spot market is not very prosperous due to high price, but the expectation of China's production reduction is strong. In addition, the international cotton resources are available. In the late part of this year, it is more difficult to add, and there are few cotton reserves in China. The risk and capital endurance of hoarding enterprises are increasing, which determines that the high cost acquisition of cotton this year is difficult to sell in the late stage.

Therefore, Chinese enterprises should adapt to the high cotton price era, and the spot price trend may rise from the past straight line to the stage of oscillation rise.

Three, macro policy and capital trends will become the regulator of the future oscillation of the market.

From the overall background of the current commodity market, the Federal Reserve has promised to buy $600 billion bonds before the end of the second quarter of 2011. Europe and Japan announced that the low interest rate environment will remain unchanged and the international monetary easing policy will continue. Although the focus of the November 11th G20 summit is likely to focus on the Federal Reserve, the current economic slump will not change the position of the US policy. I believe that after the meeting, the US dollar will also go into a low channel, and the liquidity monetary environment of commodities is expected to continue to favor the development of commodity market.

In China, CPI continued to be high and reached 4.4% in October. In the future, China will enter the stage of monetary policy to manage inflation effectively. At the end of 2010, the pace of raising interest rates will not even be ruled out. It will not be ruled out immediately after the announcement of CPI in October. However, in the face of a relaxed international monetary environment, interest rate expectations arising from interest rate hikes and expectations of RMB appreciation will surely increase the inflationary pressure of imports, and it will also become an opportunity for a new round of short-term adjustment, and how to avoid these factors effectively.

From the perspective of futures market funds, the futures market, including ICE cotton and domestic cotton futures, has accumulated a lot of pressure on capital gains and returns. It can also be seen from the 8 and 9 days of November.