Expert Analysis: Zhengzhou Commodity Exchange Cotton Futures Increased Volatility

Zhengzhou commodity exchange, December 8th

International: short term fall

Intercontinental Exchange (ICE) cotton futures closed down on Tuesday for second consecutive days.

Market participants expect that before the US Department of Agriculture announced the monthly demand and supply report on Friday, the international cotton market has a strong wait-and-see mood and the volume of pactions is still relatively low.

Recently, the tight supply situation of the international cotton market has eased.

India state run

In addition, the market expects us cotton production to reach 12 million 200 thousand acres in 2011, up from 12% in 2010, a 4 year high.

Meanwhile, the latest US report shows that cotton production in Brazil has been raised to 1 million 666 thousand tons in 2010/2011 and cotton planting area has increased to 17 million 250 thousand mu, up 40% and 38% respectively over the same period last year.

Based on this expectation, the United States raised Brazil's cotton exports to 500 thousand tons this year.

However, there are still many uncertainties in the international market. The above news can not dispel worries about the future supply of the market. The two most worrying problem is the rapid consumption of new cotton stocks in the United States and the erratic export policy of India.

Earlier, local truck drivers or strikes were reported in India. Once the strike is on the scale, this will seriously affect the shipment of cotton exports due to expire (December 15th). It is estimated that the shipment of 935 thousand tons of cotton exported before December 15th will only be completed by 50%.

Insiders expect that the export registration of cotton yarn will not be resumed until March 11, 2011.

This will affect the tightening of international cotton supply again.

Therefore, the international cotton market is not optimistic.

Domestic: rebound ends

With the short-term consolidation of international cotton prices, domestic cotton prices also rebounded and Zhengzhou commodities were disrupted.

Dong Shuzhi, manager of the cotton business department of Peking University Founder group, said in an interview with the international finance Daily: "the signs of high cotton prices restraining consumption demand have already been reflected. The demand for downstream manufacturers is not as good as before.

In addition, from 11 to December, imported cotton came to Hong Kong in a short period of time, and supply tensions eased in the short term, forcing cotton prices to rebound.

Data from the Ministry of Railways Statistics Center also showed that in November, the average daily load of cotton was 274 vehicles, an increase of 67 vehicles compared with the same period last year, an increase of nearly 30%.

The futures analyst of Shanghai futures said that the supply and demand tension of the cotton market has been alleviated from the acceleration of Xinjiang cotton to the large number of imported cotton.

However, it is noteworthy that the current registered cotton warehouse receipts on the Zhengzhou mercantile exchange are much smaller than the same period last year.

In December 8th, Zheng's data showed that only 73 cotton registered warehouse receipts, and last December, the average amount of cotton warehouse in more than 1000.

"From this point of view, traders holding cotton are not in a hurry to ship."

See thunder.

Dong Shuzhi pointed out that, as a whole, there are still a considerable portion of cotton in the hands of cotton growers. It is understood that nearly 50% of Shandong's cotton market has not been sold by cotton farmers. The phenomenon of selling is more serious. "Low cost cotton is not up to the market because cotton farmers are reluctant to sell, and the manufacturers are mostly buying and warehousing the former high cost, and now it can be said that there is no profit, so no one wants to register for warehouse receipts."

"In this way, though the supply and demand of the market have been alleviated, the price is still at a high level and there is little room for falling."

See thunder.

Price: volatility intensifies

Although the recent rebound in cotton prices has weakened, and there has been a slight decline, but market participants believe that this does not mean that cotton prices will fall sharply.

"Although short-term cotton prices will fall, textile mills and traders have a good idea. There is no possibility of a significant drop in cotton prices."

Seeing thunder, pointed out that "the overall reduction of cotton production has laid the foundation for high cotton prices."

China Cotton Association recently pointed out that the price of agricultural materials and labor prices needed for cotton rose, and the cost of labor and time was much higher. Compared with other agricultural products, the cotton area was always increasing little because of the high price and high cost.

The cotton farmers' intention to survey cotton released by the cotton association of China in 2011 showed that two of the three main planting areas will expand the cotton planting area next year. Among them, the cotton growing area in the Yangtze River Basin is expected to increase by 11.7%, and the the Yellow River basin is expected to increase by 4.9%, with little increase.

In addition to the increase in cotton planting area in China in the new year, the current international cotton price is also affecting cotton prices.

On the one hand, there are variables in the international market supply. On the other hand, domestic cotton planting depends on the actual situation.

Analysts predict that domestic and international cotton prices will fluctuate in the future.

"Cotton prices are expected to remain high and volatile, and domestic cotton prices fluctuate at a range of 24000 yuan to 28000 yuan per ton."

See thunder.

Dong Shuzhi predicted that there will be a wave of seed cotton market before and after the Spring Festival, and domestic cotton prices will remain basically high and volatile.