Weak Spot Demand, Lower International Cotton

The near future, ICE American cotton The December contract is under the pressure of the EMA system, and the price is falling continuously. While the CF1201 contract of the main Zheng cotton company runs at 22000 to 23500 yuan in the oscillating interval, which is supported by the bottom of the interval, has been out of the small rebound market for a while, but the period price is under 23000 yuan.

In addition, from the spot market of cotton, India relaxed cotton export policy and increased domestic cotton planting area, and all of them suppressed cotton prices. The author believes that there will be limited space for the rebound of cotton prices in the future market.

Weak demand in spot market, low cotton prices

As of the end of June, the number of Xinjiang cotton transported out of Xinjiang was 2 million 170 thousand tons this year, and there are still 300 thousand tons to be shipped. It is expected that all the cotton will be transported by the end of August. Since March, market demand has been sluggish, and spot cotton prices have been on the decline under the leadership of low futures prices. In July 9th, data released by China's National Bureau of statistics showed that CPI rose by 6.4% in June, a record high in three years. Due to the high impact of natural disasters such as high CPI data, drought and floods, inflationary pressure has further increased, resulting in the third increase in interest rates in the central bank in July 6th to control the market.

For China's export oriented cotton textile enterprises, on the one hand, the pressure of market inflation and RMB appreciation has increased the cost of domestic labor, thereby greatly reducing the profits of export enterprises, resulting in a slump in cotton textile enterprises and a drastically reduced demand for cotton. On the other hand, the Ministry of Finance has sharply reduced import tariffs on textile raw materials such as blended fabrics and linen yarns since July 1st, causing domestic textile enterprises to import more of these raw materials, thereby reducing domestic demand for cotton and eventually causing cotton prices to continue to fall.

　　 New cotton Growth is good, increasing production is expected to suppress the price.

High cotton prices in 2010 raised cotton growers in cotton growers. China Cotton Association predicts that the cotton planting area will reach 5 million 400 thousand hectares in 2011, an increase of 5.2% over the same period last year. Although cotton planting has been affected by drought and floods this year, cotton growth has changed in recent days as weather conditions have eased. The increase of planting area and the good growth of cotton have increased the expected cotton production in the new year, which has caused great pressure on cotton prices. In addition, the weather condition of Xinjiang's largest cotton producing area in recent years is better than that of the same period last year. At present, the overall cotton growth is gratifying, and the cotton picking time is expected to be 20 days in advance. From August 20th to September 5th, new cotton will be on the market in South and North Xinjiang, and the pressure of new cotton supply will further suppress cotton prices.

China's reserve cotton management company has said that, thanks to favorable weather conditions, as the world's largest cotton producer and consumer, China is expected to achieve a bumper harvest this year after a three consecutive year of production cuts. China cotton net said that the total output of cotton is expected to increase substantially over the past year, and the unit production will also increase. This will increase the pressure of cotton prices going down for the current domestic cotton market, which is in a depressed demand.

International cotton prices continue to go down and drag. domestic market

In July 1st, the United States Department of agriculture's India counselor said in a report that the India industrial and commercial bureau announced that 2010/2011 will increase its export quota of 800 thousand bales of cotton, reaching 5 million 100 thousand packages. India's loosening of cotton export policy will increase global cotton supply and suppress cotton prices in the international market.

The International Cotton Advisory Committee said that global cotton consumption has shrunk sharply in 2010/2011. The competition between high cotton prices and cheap chemical fibers has weakened 2010/2011's demand for cotton in the second half of this year. Cotton consumption will drop by 3% to 24 million 500 thousand tons this year. The weak global cotton consumption is an important reason for the continuous decline of international cotton prices. If the consumption is not improving, the international cotton prices will continue to go down.

I believe that in the global market demand for cotton weak, oversupply pressure increases, cotton prices rebound in space is limited, the market outlook is mainly based on the idea of selling short selling.