Super Loose Supply Difficult To Block Cotton Futures Rally

The abundant supply of cotton in the new year has not overtaken the rise of futures cotton.

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According to the latest data released by China Cotton Storage General Corporation yesterday, December 31, 2011 to January 6, 2012, due to new year's day.

Although the scale of storage and purchase is so large and the pattern of supply easing has been stereotyped, since the end of October, the cotton futures contract has fallen to the level of 19850 yuan / ton of national storage and purchase price, and the 1205 contract has launched a wave of rising prices.

As of yesterday's close, the contract closed at 21190 yuan / ton, less than 3 months, rose 1340 yuan / ton.

Obviously, in the context of lower sales, there is a strong desire to make more capital, but the spot market starts more.

Commodity data provider business (100ppi.com) analysis report that, despite the strong desire to raise prices in the cotton market, sales of textile enterprises are still not improving, and the price of cotton lint is weak.

Recently, the rising price of lint cotton has boosted the enthusiasm of enterprise acquisitions, and some parts of the seed cotton market have ushered in a small peak, and prices are rising steadily.

Faced with the trend of 2012, the confidence of downstream cotton spinning enterprises is difficult to set, and the external demand is shrinking. At the same time, we need to face the impact of low price textiles in India and Pakistan, and the industry is facing adjustment.

"China's acquisition and storage will ease the pressure of market supply, and it will continue to make a positive contribution to the market. Cotton prices will remain strong in the short term, but the cotton price will have a consolidation pattern in the medium and long term," he said.

At present, the impact of New York cotton futures rose, the import price of Chinese cotton ports increased slightly, or generally between 0.5 cents and 0.75 cents.

In fact, the rise in cotton prices is not driven by consumption demand. Although China's textile mills have increased the amount of cotton purchased after they get the quota, they have not yet reached the quantity that can lift the cotton price.

In addition, enterprises' funds are tight and their attitude is cautious.

The United States Department of agriculture's cotton export report also shows that the recent US cotton exports are not heavy.

From December 23, 2011 to 29, the net volume of US cotton exports was -0.22 million tons in 2011/2012, and the export volume of us land cotton also decreased by 22% compared with the previous week.

The latest report released by the International Cotton Advisory Committee (ICAC) shows that about 40% of global inventories appear in the mainland as a result of China's State purchasing and storage.

Instead of other parts of the Chinese mainland, cotton stocks are expected to grow by 26% to 8 million 700 thousand tons, the highest in nearly 4 years.

Due to weak demand, coupled with oversupply of cotton prices to bring downward pressure.

The Cotlook A index fell from 114 cents / pound in early August 2011 to 93 cents / pound at the end of 12.

The average Cotlook A index in the first 5 months of 2011/2012 is 109 cents / lb, which is lower than 1/3 of the 2010/2011 average.

According to the analysis of China cotton reserve analysis, many textile enterprises intend to extend their holiday this year. It is expected that the spot market will start slowly after the Spring Festival. If there is no obvious change in the macro level and policy level, it is expected that the difficulty of increasing the cotton price trend after the Spring Festival will increase.