Cotton Market Analysis: Market Divergence Increases &Nbsp; Vigilance High Risk

On the 150 cents / pound and the India cotton export policy, "no words", the continuous rainfall in southern Xinjiang, and the low temperature snowfall in Northern Xinjiang, some research institutions and Futures Company have predicted that the three grade cotton spot will break through 30000 yuan / ton, just around the corner. The lowest point of the three grade cotton in the 2010/2011 year is 26000 yuan / ton, which has been confirmed, and this year is even expected to reach 40000 yuan / ton mark. The whole market is in a state of "breaking the high point of the past year, and the top can not be estimated". Some cotton processing factories also think optimistically that the quantity of foreign cotton pported to the main port of China before the end of December is not large, because Xinjiang cotton is late in the market and the pportation pressure is high, and the three cotton is not detected in the cotton inspection area in the mainland. In recent days, Xinjiang agricultural development bank once again issued support for the acquisition of loans, December arrival SM class cotton quotes.

Therefore, although the processing cost of grade four cotton reaches more than 27000 yuan / ton, the risk is not large as long as we achieve quick purchase and sales and shorten the turnover period of lint cotton.

But I do not think so, cotton, corn and other large agricultural products, this "spring" has been stretched very tight. In the short term, under the support of "hot money" and supply and demand, cost and other conditions, the three level cotton spot does not exclude the level of 29000 yuan and 30000 yuan per ton. CF1105 rose to 28000 yuan / ton or 28500 yuan / ton, and it is not impossible. However, from the medium to long term situation, the lowest point of 2010/2011 is 26000 yuan / ton, which is purely "narcissism". After May 2011, the price of three grade cotton will fall below 25000, 22000 yuan / ton.

The specific reasons are as follows:

First, whether China's economy is inflation or deflation in 2011? I think it is the process of national monetary policy from "loose" to "tight".

The current rise in agricultural products is affected by the "Lewis turning point" in the Chinese economy. With the withdrawal of the service industry and the labor dividend in China, the government acquiesced in raising the income of the farmers through the rise in the price of agricultural products, but the rise in industrial products and other commodities is "tight". When the sales of agricultural products reach more than 70%, it will be a concentrated period of policy.

A prominent phenomenon is that since May of this year, new loans continue to be tightened and liquidity has gradually weakened. The real estate industry has become a pillar industry in China's economy (some of which are more than 80% of GDP's contribution to the real estate industry). At present, the downward trend is already obvious. The industry expects that the price will drop by 20% in the four quarter of 2010, let alone the agricultural products and the Zhejiang capital of "stragglers".

Second, the cotton consumption in 2010/2011 is overestimated.

From the relevant data, whether USDA, ICAC or COTLOOK and some cotton research institutions in China will set the consumption of cotton in 2010/2011 in 9 million 800 thousand ~1100 million tons, but in fact, even 9 million 500 thousand tons or even 9 million tons are not.

The industry's policy is to "eliminate backward production capacity and form a group of competitive competitive enterprises". The small and medium sized cotton spinning enterprises not only reduce their loan support significantly, but also adjust the control of raw materials to Yu Dazhong enterprises, plus the increase of wages, taxes and energy costs. How many cotton spinning enterprises can maintain more than 80% of the start-up rate? On the other hand, since October, domestic polyester staple fiber, viscose staple fiber and other cotton substitute materials continue to "increase in price". By the end of October, more than 10 viscose staple mills in the country are basically in "zero" inventory status, and the cotton textile enterprises, especially small and medium sized cotton spinning enterprises, have a very large structural adjustment range, and the demand for polyester cotton yarn and human cotton yarn is "hot." on the one hand, the state has made textile preparations in the past two years.

Third, the situation of cotton cultivation in the world is expected in 2011.

The average export price of US cotton is 72~75 cents per pound in 2009/2010. As a result, the US planting area increased by 50% in 2010. This year, the average export price of US cotton is expected to exceed 120 cents / pound. How much will the planting area increase next year? Similarly, cotton planting in India and Xinjiang will increase considerably. China's 80 million mu of cotton planting area is guaranteed.

Fourthly, new cotton will change the supply and demand situation in 2011/2012.

Because the new cotton market has been postponed for more than a month in 2010/2011, the corresponding cotton consumption in this year will be reduced by one month. Once the new cotton comes into the market in 2011/2012, the shift of cotton situation will start in 5 and June.

Fifthly, cotton supply exceeds demand in India in 2010/2011.

Cotton production in India reached more than 500 tons in 2010/2011, while its domestic consumption capacity was stable at 3 million 300 thousand ~360 million tons.

Therefore, although the India government did not allow cotton to ship a large quantity of exports before December, at least 1 million tons of India cotton would be shipped from March next year.

Six, the state attaches great importance to it. Wen Jiabao, premier of the State Council, stressed in his report on the work of the government "speeding up the pportation of Xinjiang cotton." therefore, there is experience in the centralized coordination and shipment of Xinjiang cotton in 2009/2010. 2010/2011 Xinjiang cotton will replenish the shortage of high-grade cotton in the mainland in time.