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Cotton "Withered"

2011/4/28 9:18:00 68

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Cotton Price In Cotton Market

The most arrogant commodities in the past year seem to be moving against the current.

From the middle of last year to 10 months, commodities

market

In particular, agricultural products have gone through a process of shifting their focus.

cotton

This is clearly the star of this change.

Cotton price in the US market has almost doubled two times, from about 70 cents per pound to 210 cents.

The tight supply fundamentals almost concealed the shortcomings of all the macro aspects, whether China's entry into the liquidity tightening channel or Japan's great earthquake did not shake the high cotton prices.

But since the beginning of April, although the continued decline of the US dollar has supported some commodity prices, cotton suddenly became dumb. The cotton price in the ICE market has evaporated about 25% in the past month, and the domestic cotton price in China has also been over 20%.

Cotton can not be blamed for "turning the boat in the sewer" this time.

The QE2 policy of the Federal Reserve will expire at the end of 6 this year. The possibility of us launching quantitative easing is actually a common commodity.

And in April, before the 26~27 fed meeting, cotton prices continued to decline for nearly a month.

Insiders pointed out that the price of cotton inside and outside the plate fell before most commodities, probably due to its own spot market factors, and the weakening of supply and relaxation of demand resulted in the weakening of cotton prices.

Hongyuan futures reported that in recent weeks, the US cotton export contract volume has been negative for a long time, and China has cancelled a lot.

Order

It may lead to the failure of US cotton exports.

At the same time, Australia cotton and Brazil cotton have a bumper harvest this year. New cotton is going to be listed and shipped on a large scale. The current price is very low, which is a great pressure on the export of American cotton and the international cotton price.

Although weather factors are expected to provide support for the market, I am afraid it is difficult to resist the impact of the loosely cotton supply side and the obvious setback of China's demand.

China, the world's largest cotton producer, has also improved its supply and demand this year.

On the second annual (2011) cotton textile Futures Hedging Conference held on Monday, Feng Mengxiao, director of the information monitoring center of China cotton reserve management company, said that without accident, the contradiction between supply and demand of global cotton in 2011 will be significantly alleviated, and the stock at the end of the year will hopefully return to more than 10 million tons.

In view of the large proportion of industrial and commercial inventories this year, cotton consumption is constrained by many factors.

Feng Mengxiao introduced that the 2010 year global cotton initial stock drop, the cotton main supply country policy adjustment as well as the global supernormal loose monetary policy were the main reason which promoted the cotton price to rise sharply before.

The annual cotton price increase in 2005~2010 is 5%, 3%, -5%, -5%, 40% and 86% respectively.

The annual growth of cotton in 2009 and 2010 exceeded the regular range, mainly due to the decline in global cotton initial stocks in 2010, to 8 million 690 thousand tons, the lowest level since 1997, while China's initial cotton stocks were about 2 million 320 thousand tons, which also hit a low of 1995.

Today, these positive factors no longer exist, and the tightening of global liquidity is pressing. China has raised the deposit reserve ratio of financial institutions 10 times and raised interest rates several times since last year. India, Korea and other economies also tightened their policies. The European Central Bank also announced interest rate rises earlier this month.

At present, the end of the QE2 from the US is only 2 months. Although the possibility of raising interest rates by the Federal Reserve is not high, any measures beyond the expectation of maintaining the 0 interest rate will suppress the commodities dominated by cotton.

Speculative funds on cotton also began to withdraw from the market.

According to CFTC's historical position report, the net position of the US cotton management fund has shown a downward trend since the fourth quarter of 2010. It slipped from around 56000 hands at the peak of September last year to more than 19000 hands last week.