Cotton Future Situation: Pie Or Trap?

Cotton supply and demand statistics

(1) the global gap between supply and demand reached 2 million 610 thousand tons in 2009/2010, and the gap was mainly concentrated in China.

In particular, the gap between August 2010 and early November is a major reason for the surge in cotton prices this year. It is also an excellent opportunity for speculation in domestic hot money. Abundant liquid capital is coming up in the country's multiple regulation of housing prices and the stock market downturn.

The supply channels have been monopolized, the shortage signal and the production reduction signal have been enlarged continuously, and this year's new cotton market is late. The contradiction between supply and demand has been doubly hyped. In the external environment, the US dollar is weak, and the international commodity market has gone up. The expected increase of the global inflation has finally increased the cotton price to a record high of more than 32000 yuan / ton.

(two) the basic balance of global supply and demand in 2010/2011, but from a local perspective, the gap between supply and demand in China has reached a record high.

China's textile enterprises have experienced the brutal test of the first half of 2010, and many enterprises have turned their attention to the international market.

Faced with the gap of up to 3 million 830 thousand tons of cotton, how to integrate domestic and international resources to effectively meet the needs of domestic textile industry and minimize the fluctuation of cotton prices is not only the purpose of government regulation, but also the common aspiration of textile enterprises.

Two. Factors affecting cotton market

(1) Lido analysis

1, from the perspective of the global economy, the instability of exchange rate will become the norm.

The US dollar will not change its weak position in the future for a long time, but it does not exclude its possible use of foreign economic crisis to prompt us dollar appreciation or stability in short term to maintain its credibility.

China's economy has continued to improve, the US dollar has been in a weak position for a long period of time, and the currency disputes in the international market have intensified.

2, the yuan still has a strong expectation of appreciation, and China has become the country that got out of the economic crisis earlier.

Especially next year's inflation expectations are still large, and even face global inflation.

There are economic reports that China's CPI will be raised to 4% next year. It is estimated that the price of agricultural products will be increased gradually under the policy of the state's policy of benefiting farmers.

3, adequate private capital, in the country's regulation and control of the property market and the clean-up of the stock market, domestic commodities, especially the resource goods with obvious supply and demand gaps, will still be the main targets of these funds.

4, from the domestic supply and demand relationship, the gap in China's cotton in 2010/2011 has reached a record high.

5, China's stock fell to 2 million 879 thousand tons at the end of the year, and the inventory consumption ratio was 28.11%, far below the ten percentage point of the world average.

The national reserve is estimated to be less than 1 million tons, and the limited number of available markets will be limited. In the long run, it is necessary to increase the purchase and storage in order to regulate the market.

6, from the perspective of cotton safety, it is necessary for the state to adjust the cotton price.

From the perspective of China's trade in the international market, the price that we need to import large amounts of resources will not be too low.

The annual cotton inflation and production costs should be maintained at least 5.5 yuan per catty, so that farmers will be able to maintain their income and make cotton farmers confident in planting cotton.

7, the domestic cotton cost will be estimated at around 27000 yuan / ton this year. If the cost of holding is added, the cotton will also increase.

8, from the downstream point of view, downstream enterprises are not afraid of high prices, and are afraid of price fluctuations, because enterprises can buy and maintain value in futures markets, and the profits of downstream mills are still considerable. Now they are worried that the price of cotton yarn has declined significantly because of the substantial reduction of raw materials.

(two) negative analysis

1, China's increase in the reserve ratio and the expectation of interest rate adjustment, coupled with the state's attack on market speculation, has raised the cost and risk of capital market speculation, and domestic commodities may still fall, but its amplitude may be restrained to a certain extent.

2, from a historical point of view, correction must be excessive. At present, panic is strong and panic selling is not unusual.

At present, the bottom of the textile industry is afraid to pick up the goods, mainly to clear the warehouse, and the middle end dare not to add the warehouse to control it. The upstream do not dare to copy the bottom and take the wait-and-see as the main way to prevent overfall losses.

Combined with the above analysis, our judgement is that cotton will continue to run at 26000-30000 yuan / ton next year. At present, the price has entered the bottom area. The latest cotton average price and the cotton price index have been upside down to 2000 yuan. At present, the impact of the policy on the futures market has also exceeded the expected trend, and its impact on the spot market is difficult to endure. When the regulation pressure is gradually reduced, cotton enterprises holding high cost cotton will usher in a new opportunity for the price to bottom up.