Cotton Lost Its Former Glory.

The recent fall in cotton futures prices is strongly contrasting with the identity of the stars in the commodity market last year. Guangsheng futures research and development center Xie Xianghua believes that the reason for this is that Zheng cotton has encountered two pressures of supply and demand. No matter whether the international cotton price or the domestic cotton market has been in a downward path, the short term short pattern will remain unchanged, and it will continue to seek support downward.

Since the beginning of April, although the continued decline of the US dollar has supported part. commodity Price, but cotton is weak. The cotton price in the ICE market has evaporated about 25% in the past month, and cotton prices in China have also been over 20%. As of Friday, Zheng cotton main contract 1109 closed at 26280 yuan / ton, weekly decline of 2055 yuan / ton.

High cotton prices are being suppressed by gradually abundant supplies.

At present, cotton in the northern hemisphere, such as China, India and the United States, has entered the sowing season. Many agencies predict that the sown area of these countries has increased to varying degrees. The planting area in the United States has increased to 12 million 560 thousand acres, an increase of 14.5%; and the planting area in India has increased by 10%.

China, the world's largest cotton producer, this year supply and demand The situation has also improved. On Monday, the second (2011) cotton textile enterprise futures hedging exchange conference, Feng Mengxiao, director of 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 relieved, and the stock at the end of the year is expected to 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.

Meanwhile, cotton picking in the southern hemisphere, such as Australia and Brazil, has already begun. Market participants pointed out that the supply from Brazil alone has already brought impact to the market. Brazil's Ministry of agriculture forecast in April that cotton production in Brazil in 2010/2011 will exceed 2 million tons for the first time, reaching 2 million 27 thousand tons, 420 thousand tons higher than the previous record of 2007/2008, an increase of about 800000 tons compared with the same period last year, an increase of 70%. and Brazil Domestic cotton consumption is only 1 million 100 thousand tons, and the remaining cotton will be transported to the international market.

Liquidity tightens hot money out of cotton market

Global liquidity is gradually tightening. 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 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 the CFTC history, the net multi - holding of the US - Pan cotton management fund has fallen from the fourth quarter of 2010, falling from about 56000 hands in the peak of last September to more than 19000 hands last week.

Domestic cotton demand shrinks

In recent weeks, the volume of US cotton export contracts has been negative. China has cancelled a large number of orders, which may lead to the failure of US cotton exports. Xie Xianghua, the Guangsheng futures research and development center, believes that although weather factors are expected to provide support for the market, I am afraid it is difficult to resist the impact of the weakening of cotton supply side and the obvious setback of China's demand to the market.

At present, the operating rate of domestic textile enterprises has dropped from 93.6% to 86.92%, and the ratio of cotton distribution to cotton has decreased from 83.6% to 81.54%. Many enterprises believe that the current market situation is tortured. As raw material supply cotton enterprises, the sale of lint sale is out of line, and textile enterprises are also under pressure. Some medium-sized textile enterprises have higher stock of yarn, and the phenomenon of substitution of raw materials for production is increasing. Market pressure is relatively large. In terms of seed cotton purchase, the market resources were relatively small, and the price of lint sales fell all the way, so the seed cotton purchase quotation continued to decline, and cotton mills basically stopped collecting. Many enterprises believe that the current market weakness is hard to change, and it has just entered a period of weakness. {page_break}

Operational suggestions remain empty.

Looking ahead, Xie Xianghua, the Guangsheng futures research and development center, believes that on the technical side, the main 1009 contract receives a long Yin line this week, which shows that the advantage of shorts is obvious, and the market is still in a downward trend. However, the current price deviates from the short-term average, and there are rebounding and correcting demand on the disk. Therefore, in view of the current low consumption of cotton downstream, the suggestion in operation is still empty.