Focus On Cotton: &Nbsp; After High Consolidation, It Will Fall Back.

The acquisition of cotton in China has started to scale in recent years. In recent days, the continuous rain has cast a shadow over the new cotton's high yield forecast. Affected by this, Zheng cotton main 1205 contract price entered the 21850 - 22500 interval, the Japanese line for three consecutive days on the 60 day line, the short term showed strong trend.

The international cotton market is also changing due to weather factors. Pakistan floods and US hurricanes have increased the uncertainty of new cotton production. The ICE cotton main December contract closed on Wednesday (September 7th) and broke through the 60 day moving average pressure to enter the oscillation interval above 110. The change of weather has brought great uncertainty to the cotton market, and has also enhanced the confidence of many parties to a certain extent. But from this year's view, the overall situation of cotton production in the world and in China has not changed significantly, and the price of cotton will drop after high consolidation.

Cotton production increased and acquisition funds tightened.

According to the US Department of agriculture's September report, the global cotton output in 2011 is slightly larger than the demand for nearly 1 million 700 thousand tons. Even considering Pakistan's 400 thousand tons reduction in floods, the world's cotton still has nearly 1 million 300 thousand tons of surplus, and the supply is relatively loose. Domestic cotton production is expected to increase by 1 million tons over the previous year. According to the calculation of 20000 yuan per ton, the need for acquisition increased by 200 million over the previous year. As part of the cotton business suffered losses in the cotton prices in the previous year and failed to return loans to the Agricultural Development Bank in a timely manner, the Agricultural Development Bank has quietly raised the loan threshold this year and requested loans to provide collateral at the same time. In some areas where loans to agricultural development loans are not very high, the difficulty of loans from commercial banks and credit cooperatives is also increasing. Cotton enterprises Liquidity is relatively limited. The six months' continuous inventory process has significantly reduced the funds deposited in the cotton textile industry chain in the past two years. The increase in production and the tight funding limit limit the growth of cotton prices.

Orders for textile industry have not changed well. Cotton price Rising is hard to digest.

The global sourcing strategy and online sales mode of garment retailers will lead to the transfer of textile and garment orders to Southeast Asian countries, the transfer of clothing production to the consumption areas, and the order of textile garments to be small, short and fast, which will lead to great flexibility in cotton consumption. The substantial increase of labor cost in garment enterprises has also made clothing enterprises more sensitive to costs and more difficult to digest raw materials.

At present, yarn sales are smooth and seasonal, and cotton prices temporarily stabilize profit margins for textile production temporarily. However, once the new year's cotton price level is determined, export orders will be redefined according to the new annual cotton price, and profit margins will be locked in a very small inter regional range. The cotton spinning industry chain is longer and the cost increase needs to digest each link of the industrial chain by layer by layer. It is like a very fine sewer pipe. Once thrown into a little larger material, it will probably be blocked. Consumption does not support a sharp rise in cotton prices.

　 The current price difference will increase the pressure on the futures market.

Taking account of the 2011 year's temporary storage and purchase rules, considering transportation cost and capital cost, Spot cotton price Higher or equal to 19200 yuan / ton, the possibility of business storage is smaller, more consideration from the matching or futures market hedging. At present, the futures price is 1500 to 2200 yuan higher than the reserve price, which is nearly 800 to 1000 yuan higher than the matching market. Even considering the cost difference between matchmaking and futures market, futures market is still the best hedging place.

At present, the new cotton market is in the initial stage. The higher purchase price and limited funds will lead to a stalemate in the acquisition. Once the new cotton market is increasing, cotton farmers will finally accept the reality and sell seed cotton according to the purchase price supported by the market funds. It is estimated that when the contract is started, the cotton price will come down.