Analysis: Cotton Price Should Be Wide Oscillating To Find Middle Stream Price.

　 Recently, the policy was intensive. After 10 days of raising the deposit reserve, the central bank raised the deposit reserve ratio by 0.5 percentage points on the 19 day, which shows that the management is determined to control the excessive price rise. Under the influence of the sudden bad news and the US cotton down again, on Monday, Zheng cotton did not show the expected opening, that is, the situation of closure. Instead, it began to oscillate sharply, adding a quick stop to the end of the session, and releasing a part of the short kinetic energy on Tuesday. When the new contract was introduced on Wednesday, the 1109 contract price rebounded rapidly, confirming the support of 25000, but in the short term, it was difficult to recover quickly.

First, since entering the November, the macro side has been losing momentum. The Irish debt problem has aroused global concern. The European debt crisis is getting more and more intense. The future development is affecting people's hearts. First, the development and budget of Ireland's domestic political system could be successfully passed, followed by Portugal and Spain. In addition, the DPRK's bombardment of South Korean islands triggered a surge in demand for us dollar security, and investors worried that the Irish debt crisis might spread to other countries in the euro zone. The US dollar index rose sharply on Tuesday and is about to hit the 80 mark again. In order to prevent the hot money inflow and increase domestic inflation, Asian emerging economies have adopted tightening policies to cope with risks. South Korea, India and China have raised interest rates to recover liquidity. Especially after China raised interest rates, they continuously raised the deposit reserve ratio of gold and steel institutions in nine days' time, combined with the management to curb the excessive price rise, and put heavy punches to control inflation. This indicates that China began to enter the interest rate cycle and will further tighten its monetary policy. The government strictly controls prices and guarantees the stability of people's livelihood. It also explicitly controls the speculation of cotton (25670190.00,0.75%) and corn (2295,9.00,0.39%) and severely punish hoarding or raising prices.

Second, from the point of view of supply and demand, the low price in the short term will reduce the spot price to a certain extent, and the spot traders' willingness to ship will be stronger, and the stock squeezing effect will be obvious. But in the long run, with the further downward price, approaching the average cost and even loss of the purchasers will result in a reluctant sale. In addition, Xinjiang's railway sector has been deployed ahead of schedule this year to speed up the export of cotton. At present, there are about 300 tons of leather in the sunrise and about 13 thousand and 500 tons. From September 1st to the present, about 400 thousand tons of Xinjiang cotton transported abroad, and it is estimated that the export of Xinjiang cotton will reach 1 million tons by the end of this year. Since November, the cheap cotton purchased in the early stage will continue to arrive in Hong Kong. The import price of cotton in 4 and May will be only 15000 yuan to 16000 yuan per ton. Overall, supply tensions will ease in the year. In the long run, the domestic cotton in the new year faces a gap of about 4 million tons, which is an indisputable fact. At present, the national cotton reserves are limited, only 300 thousand tons. Therefore, the situation that cotton is in short supply will be revealed later.

Third, export demand may not be optimistic for the time being. Although the price of cotton has dropped, the downstream enterprises still dare not rush to take orders and worry that the price of cotton will fluctuate again. In October 2010, the export volume of China's cotton cloth was 679 million meters, a decrease of 4.13% compared to the same period, a decrease of 18.21% compared with the same period last year. In October, the export of cotton yarn was 32 thousand and 200 tons, a decrease of 5.8% compared with that of the previous month, a decrease of 18.11% over the same period last year. To 23 days, it is estimated that the profit margin of 32 knitting yarns in textile enterprises is about 3800 yuan / ton. The cotton price rose sharply at the end of October, causing the cotton mill to be on the brink of loss. By the middle of 11, the price of yarn increased rapidly, and the profit was huge. But with the sharp fall in cotton prices, yarn prices began to callback, profit margins again narrowed. Early spinning enterprises are generally cautious, mainly in the consumption of inventory. With the consumption of old cotton and national cotton stocks, the spinning enterprises that have to buy new cotton raw materials are also ordered by purchase, followed by purchase, without accumulating large stocks, and generally only for one month's production. At present, the fall and instability of cotton prices still aggravate the wait-and-see mentality of textile enterprises, and the price of cotton yarn is also beginning to appear without price. Without the support from downstream, the support of purchasing cost alone will hardly keep cotton prices at a high level.

Fourth, from imports Resources In view of the fact that the US cotton contract sales have completed more than 80% of the plan, the market will pay attention to the changes in the position of the US cotton fund and whether it will use the output adjustment and Chinese demand to suppress cotton prices. If the December USDA supply and demand report really adjusts the demand in China, it will further confirm that the US funds have duplication of the 2004 soybean (4388,5.00,0.11%) acquisition suspicion, and the domestic cotton industry chain should be vigilant. As of November 19th, ICE cotton futures CFTC fund net long positions continued to decline, indicating that the fund to do more interest weakened, 23 days ICE phase cotton March contract stimulated by the Korean conflict, the U.S. dollar's risk appetite increased, short added to suppress again limit, although some of the indicators of the daily line are sold, but in the short term, the United States cotton still has room for decline, pay attention to 100 to 110 cents / pound support.

While India has raised its output to 6 million 60 thousand tons, its export policy has not changed significantly. India textile enterprises are protesting against the high cotton prices, which are brewing a strike by textile workers, demanding that the original export volume of 5 million 500 thousand bags (1 million 190 thousand tons) remain unchanged. Under the pressure, India officials said on Thursday that there would be no increase in exports. In the short term, import resources are hard to change.

Finally, from the purchase price, the early stage Rush to buy Most of the resources in the tide are concentrated in the hands of traders and cotton enterprises. With the recent policy control and the withdrawal of many funds, there is a strong demand for panic and the demand for package insurance. The shipments are more positive, and several large cotton enterprises adopt a low price strategy for rush shipping. It is understood that a large cotton enterprise in Shandong has continuously lowered its lint price from November 11th to 24, and the current purchase price is 26500 yuan / ton. Up to now, most of the company's sales price has been upside down. There are few enterprises that insist on purchasing, and the purchasing price has continued to go down. It has generally been below 6 yuan / Jin, and has continued to run below 5 yuan / kg. The price of cotton by-products has also dropped sharply. 23 days in China cotton The price index (CC Index328) reported 27881 yuan / ton, down 3421 yuan / ton compared with the spot price of 31302 yuan in the new year in November 11th, and the spot price dropped 11%.

To sum up, in the short term, the risk of falling cotton prices is still there. The short-term support for the 25000 point is facing a bigger test. Once it is broken, the downtrend will continue. It may test the technical support of the 23000 to 24000 finishing platform in from October 11th to 20th. In the long term, after confirming that the planting area will increase significantly next year, cotton prices will still need to pick up in the late stage, and a well funded textile enterprise can consider setting up stocks in the vicinity of 25000.

　　 For cotton, the leading rod of commodities has been handed over. The best way now is to look for the price center with wide oscillations. The 25000 yuan / ton is relatively acceptable to all parties. The risk of further gains will also lead to policy regulation. Too much harm will hurt the enthusiasm of cotton growers to increase their planting area. Later, they should pay attention to the relevant macro policies and India export policies, and the weather in the process of Xinjiang cotton transportation. It is suggested that investors should wait and see or take the short-term operation as the main concern, and pay attention to the support of 25000. We can try to intervene more, and stop by 25000.