Cotton Price Futures Fell &Nbsp; &Nbsp; Hoarding Customers Cash In To Save Themselves.

Rise fast, fall faster!

By the end of November 22nd, the Zhengzhou Futures Exchange main cotton contract CF1105 closed at 25225 yuan / ton, 25.2% from November 10th's highest price of 33720 yuan / ton.

"I heard that in the early November, the regulatory authorities found a large number of cotton futures traders in Zhengzhou futures exchange to meet and talk to them, asking them to keep the price of cotton stable."

A Futures Company cotton analyst told reporters.

But what is unexpected is that under the ebb of speculative capital,

"We always have to pay for it," said one cotton buyer. "The price of cotton rose sharply this year, which was triggered by the jump in spot prices.

Tight funds, "sell self help"

"It was unthinkable that the cotton price rose a month ago, when it was really priced and no market and no cotton could be bought at a high price."

Liu Jianjun, the head of a cotton spinning enterprise, recalled.

However, the buyer's market is quietly becoming a downstream cotton business.

With the cotton futures price falling more than 25%, cotton spot prices synchronously "diving", the reporter learned that, on Monday, the purchase price of lint in parts of Shandong fell by nearly 800 yuan / ton compared with the previous trading day.

"Cotton spot prices are getting lower day by day, and most cotton companies are watching and not rushing to cotton."

Liu Jianjun said that even the price of a cotton dealer was 300-400 yuan / ton lower than the spot price of the day, but he still did not plan to copy the bottom.

Liu Miao, a cotton analyst at China Fortune futures bank, seems to worry that the state regulatory authorities will further introduce policies to control cotton prices, which is the main driving force for many cotton traders to reduce cotton stocks.

These cotton traders are more entangled than these psychological expectations, and the supply of cotton spot is quietly increasing.

Since the 7 ministries and commissions of the national development and Reform Commission and the Ministry of agriculture jointly announced in November 8th that "the cotton production area is required to strengthen regulation and control in the cotton field", many responsible persons of the domestic cotton business have revealed that Xinjiang cotton has "entered the customs ahead of schedule".

Meanwhile, the selling tide of imported cotton has also increased rapidly.

"Before the end of June this year, 3 million 600 thousand tons of cotton import quota permit has been issued. During the 7-8 months, many domestic cotton importers are hoarding imported cotton to rise. Now cotton prices have dropped sharply, and they can only sell cash."

The above cotton business executives told reporters.

According to customs data, in the first 10 months of 2010, China imported a total of 2 million 250 thousand tons of cotton, an increase of 88% over the same period last year.

However, quite a few cotton hoarding customers have felt the "tight capital chain" and had to tighten up.

"Now we want to sell cotton to us, either the capital chain is a bit tight, or the traders who have to buy cotton at a high price have to close their positions quickly. They are basically at the critical point of profit and loss."

Liu Jianjun said.

Banks have tightened the lending threshold quietly.

In November 22nd, the CBRC issued an urgent notice requiring banks to increase their support for the production, processing and circulation of credit funds for agricultural products. At the same time, it reminded banks to strengthen control over the use of agricultural credit funds, control the risk of misappropriation of credit funds from the source, and seriously investigate violations of credit funds used for farm products speculation, hoarding and hoarding prices.

"Now cotton prices are going up and down, and banks have to take precautions against the risk of cotton related loans."

A state-owned bank credit department disclosed that his bank had asked some enterprises suspected of hoarding behavior to return loans as soon as possible, and strengthened the use of credit funds for some cotton purchasing enterprises with relatively high credit volume, and prevented more credit funds for hoarding.

This undoubtedly shortens the speculative cycle of cotton hoarding.

The reporter understands that most Cotton Traders' cotton collecting funds come mainly from bank loans. The specific operation path is that the downstream cotton enterprises first apply for bank loans for cotton harvest, then pfer funds to cotton purchasers; secondly, some cotton purchasing enterprises or traders apply for loans from the bank to apply for letters of credit and fixed assets mortgage loans to purchase cotton.

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The new abacus of international cotton merchants

The sharp fall in cotton prices in China also "affects" the thinking of all cotton investors on the other side of the Pacific.

On the 22 day, 17 points, the price of ICE cotton was closed at 114.68 cents / pound in March, after being controlled by China's monetary tightening policy and the price of cotton, which fell nearly 24.5% from the highest point in November 10th, 151.95 cents / pound.

The US cotton spot exporters, however, seem to be "dodged."

"At the beginning of the US cotton summit, a buyer from emerging markets ordered tens of thousands of tons of American cotton at one time to make American cotton exporters happy."

A senior domestic cotton textile enterprise executive said, "now the output of many cotton producing areas in the United States is basically booked next year, and the price is basically close to the highest price range of cotton."

"Although the US cotton futures price has also dropped sharply, the fluctuation of cotton spot price has a certain lag in comparison with the rapid rise and fall of the period price."

An analyst at Tokyo futures explained.

Reporters learned that after the lifting of the ban on cotton exports in India, the first batch of India cotton shipped in December was shipped to China. The contract price was about 1.30-1.35 $/ lb, which is higher than the current ICE12 month contract price of 117.91 cents / pound.

India cotton exporter Bhadresh executive said, "in the first three weeks of India's cotton re export, most of the goods will be shipped to China, and Chinese buyers bid for more than 1.25 dollars per pound.

Even earlier, the price of a cotton purchase contract was at 0.9-1.25 dollars / pound.

However, such a large number of high priced cotton procurement contract can be finally implemented, in the global cotton prices fell short of nearly 25%, but become an unknown number.

According to the latest data from the customs, with the increase of cotton prices, 96 thousand tons of cotton imported in October were reduced by 100 thousand tons compared with September, and the ratio of cotton imports decreased by 52%.

"If cotton prices continue to fall, some cotton importing enterprises may consider abandoning the original high priced procurement contract, and instead buy the shipping term (forward shipment) contract and point price form to lock up the procurement cost of cotton."

Liu Jianjun said.

Reporters learned that the once hot cotton import quota resale tide also dropped rapidly as cotton prices fell.

Earlier, with the continuous rise of global cotton prices, some cotton enterprises that did not have the quota of cotton import quotas began to snap up quotas for imports, and many speculators of cotton also quickly joined in the rush to buy stockpiles.

"During the rush hour, the pfer price of one ton cotton can reach 40-50 yuan / ton, but the specific price is a private agreement between the two sides, which is mainly related to the import volume."

A cotton importer said, "but after the sharp fall in cotton prices, the enthusiasm of enterprises to purchase cotton import quotas declined.

At present, the price of foreign cotton to port is not much different from that of domestic cotton, and imported cotton is hardly profitable.

It is reported that this year China has issued a total of 3 million 600 thousand tons of cotton import quotas for customs duties and sliding duties.

Customs data showed that in the first 10 months of 2010, China imported 2 million 250 thousand tons of cotton and 1 million 350 thousand tons of import quotas had not yet been used.

However, the concept of "China's cotton demand" still attracts foreign cotton traders to hoard cotton.

In the southwestern part of the US cotton producing area, some cotton exporters still quote 0.5-1 cents higher than the US market.

"The main cotton purchasers include Louis Da FOK, wil brothers, IQ, Oran, Cargill and other large international cotton brokers.

And their main export target is Chinese enterprises.

Express.

Only when cotton prices continue to fall, they will not lose money.

Reporters learned that these large cotton brokers through the United States, Brazil and India cotton producing area cotton farmers to provide "cheap" fertilizer, so as to lock the cotton purchase price and cotton production, once cotton arrives in their hands, the extra profits from cotton prices further rise, they are basically trapped in their income.

"These cotton brokers are optimistic about the shortage of cotton stocks caused by the continuous reduction in the global cotton consumption inventory ratio, which may lead to a further rebound in ICE cotton prices."

The US futures brokers said, "these brokers are also good at amplifying the effect of cotton inventory increase and decrease in different seasons, indirectly manipulating cotton price movements, so as to achieve a win-win situation between futures investment and spot selling."

At the same time, the US Department of agriculture also firmly stood on the front line of the big cotton brokers.

In November 18th, the United States Department of agriculture again reduced the 2009/2010 cotton inventory by 3 million bales (480 pounds for 1 packages) in the end of the year of 2009/2010. The cotton production in 2010/2011 is expected to be reduced by 1 million 500 thousand packets compared with the previous month.