People Say Cotton: Cotton Three Lian Yin Adjustment Or Momentum?

Zheng cotton fell back when it hit a new high of 34870 yuan / ton last Thursday, and the three trading days have dropped sharply since then.

Host:

Huang Chengbao: after the festival, Zheng cotton was dominated by high and narrow oscillatory consolidation. Last Friday, the Japanese line entered the adjustment of Zhengyang cotton market with Long Yin filling.

On Monday, under the dual impact of the reserve requirement rate and the US cotton limit, the domestic market went down and fell below the 20 day average line support, making the adjustment further extended.

On Tuesday, Zheng cotton market rebounded slightly after being opened, but was constrained by the pressure of 330000 lines along the 21 day consolidation interval. The pressure dropped sharply and quickly broke down the important support of 32000, and stabilized 31000 rebounding near 31000.

At present, after 3 days of continuous declines, short kinetic energy has been released, and the space for further decline in the short term has been relatively limited.

Ren Xinpu: in the short term,

Moderator: the current domestic pressure of inflation is bigger. Since last year, macroeconomic regulation and control is hanging on the head of domestic commodities. Damour's sword, how do we see inflation and the impact of regulation on domestic cotton prices?

Ren Xinpu: on Monday, the meeting of the central political bureau put forward that we should maintain the continuity and stability of macroeconomic policies, improve pertinence, flexibility and effectiveness, continue to implement the proactive fiscal policy and prudent monetary policy, handle the relationship between maintaining stable and rapid economic development, adjusting the economic structure and managing inflation expectations, and preventing large fluctuations in the economy.

The high level has shown adequate vigilance against inflation expectations. Cotton, as an important raw material for production, is highly valued by the management.

This is a high pressure on the cotton futures and spot markets in the bull market.

Moderator: Recently, domestic cotton prices fluctuated greatly. What is the spot market situation? How do downstream textile enterprises respond?

Dong Shuangwei: in the spot market, at present, the mainstream 4 grade cotton prices in the mainland are near 30000 yuan / ton. Xinjiang cotton 3 level price is maintained near 32000 yuan / ton. The shortage of high-grade flowers promotes the turnover of Xinjiang cotton and the turnover of cotton in the mainland is not strong.

At the same time, with the recent sharp decline in cotton prices and domestic cotton prices, cotton turnover intensified shrinkage, buyers wait-and-see mentality enhanced.

Textile enterprises are facing the pressure of rising prices of raw materials such as cotton, polyester and short after the festival.

Zhang Huaiji: take Heze, Shandong as an example. In February 22nd, the spot inspection of the 429B cotton (public fixed, ticket, self mention) price was 30500 yuan / ton.

Some of the 400 well funded enterprises were involved in hedging before February 20th, and now they can earn profits through hedging.

A large textile enterprise in Shandong bought a small bag (fixed, ticket and delivered) at a price of 29700 yuan / ton, and the delivery volume increased in recent days.

21, seed cotton prices rose 6.4 yuan / kg, cottonseed 1.85 yuan / Jin, equivalent to lint costs 28400 yuan / ton (excluding processing fees, taxes and fees).

The proportion of grade four cotton can be 45%, and the remaining lint grades are basically 5 or 5.

{page_break}

In addition, the price of cotton yarn has stopped rising in recent years, maintaining a high level, and the 40S paction price is 42000 yuan / ton, up 3000 yuan / ton before the Spring Festival.

Moderator: domestic cotton planting is about to start, giving the market attention. What other fundamental factors will affect the cotton price in the future?

Dong Shuangwei: from the perspective of market fundamentals, the negative impact of supply tends to appear.

China's imports of cotton concentrate to Hong Kong, of which 460 thousand tons in December and nearly 400 thousand tons in January, will also maintain a high level in the next 2 to April. At the same time, China's cotton production in the current year is still concentrated in the middle circulation link. From the supply angle, at least two months, domestic supply should be guaranteed.

Judging from the factors affecting the fundamentals of the long run, it is doubtless that the forthcoming planting area in the northern hemisphere will become an important factor in the market.

In view of the record high cotton prices in 2010, the enthusiasm of cotton growers has increased significantly. It is estimated that the planting area in China and the United States will increase by a foregone conclusion in 2011.

The increase in planting area and the possible changes in yield caused by weather factors will result in the increase in output, which will play an important role in the development of market.

Ren Xinpu: according to the investigation of relevant departments, the new cotton planting area is expected to grow by 4.5% this year, and the new cotton planting area in the United States is expected to grow by 14%.

The increase in planting area will ease the tight supply of cotton in the future.

The "cotton weather" in the new year is also an important aspect of the future market. This year's drought in the the Yellow River River Basin and the drought in the Midwestern cotton producing area will affect the soil moisture in the future.

Moderator: technically, what is the trend of Zheng cotton's future market? What opportunities are there in operation?

Huang Chengbao: short term concern about the 31500 support, the next break can be concerned about the support of the 30750 areas, given the basic support of the domestic market cotton supply, cotton prices are currently less likely to turn the trend, can be seen as a technical adjustment by the policy of suppression, and further adjustment of the space has been relatively limited, but in the short term is also difficult to go up.

On the operation, it is suggested that the high and empty single should rely on the 32000 or the 20 day line to consider reducing the load, and it will be mainly short of the rebound, the pressure level is 32850, and the support level is 31000.

Short term 31500 points need close attention, can continue to operate on the empty side, otherwise it is not appropriate to kill too much, relying on 31500 appropriate participation in the rebound, the aftermarket 31000 to 33000 interval weak oscillation is more likely; in the medium term, even if the 30000 adjustment of the gateway also has strong support.

Overseas and domestic, due to the closing of external markets, the closing price of the above Friday was calculated. The US cotton contract in December closed 126.39 cents / pound, 1% customs duty paid price was 18358 yuan / ton, the port delivery price was about 21152 yuan / ton, and the port pick up price was 21589 yuan / ton under the sliding tax.

The domestic market forward November contract price is still 29000 yuan / ton, January contract price is currently oscillating near 28000 yuan / ton.

From the inside and outside spreads, the enterprises with import qualifications ordered us cotton forward, and locked in the 11 and January contracts in the domestic market. The profit margin was relatively high, and the spread was still between 6500 and 8000 yuan / ton. The price difference between the internal and external long-term forward arbitrage was close to 10000 yuan / ton at the best time point.