Macro Control Limits Cotton Price Rebound Space

Strong support from the state's temporary purchase and storage has been fully digested by the market.

Entering the 2012, the trend of Zheng cotton was obviously strong, and the main CF1205 contract broke through the pre oscillation interval.

But on the whole,

Market or digested temporary storage and support

At present, the temporary storage and storage of cotton in 2011/2012 is in an orderly manner.

In January 13th, the planned storage and storage of 123500 tons, the actual storage and storage of 11130 tons, the ratio of storage and storage dropped to 9%, the Xinjiang library was completely filming.

By January 13th, 2 million 465 thousand and 730 tons of cotton had been collected and stored, of which 62% of Xinjiang cotton and 38% of the mainland cotton.

The above collection and storage dynamic display: first, cotton purchase and storage is drawing to a close.

Although the temporary storage and purchase plan for this year will end in March 31st, the closing rate of the daily storage and storage has reached a low level since the closing of the paction, as well as the reappearance of the Xinjiang library.

Technical charts show that Zheng cotton faces strong adjustment pressure from 21500 to 22000 frontline. The main contract CF1205 has started to oscillate after hitting a 21450 rebound in January 12th.

This technology trend shows that market prices may have digested and reflect the support of temporary purchasing and storage.

Current market structure is bad for cotton price rebound.

Recently, the domestic cotton spot market has stabilised temporarily, but it is still weak compared with Zheng cotton.

The estimated cost of cotton purchasing is about 18870 yuan / ton, which fluctuates only slightly above the annual low.

The price difference between spot cotton CF1201 and China cotton price index narrowed from 1000 yuan / ton to 800 yuan / ton, and the premium was narrowed.

However, the trend of price difference between Zheng cotton's main contract CF1205 and China's cotton price index showed a reverse movement, and its premium rose from 1500 yuan / ton to 2000 yuan / ton.

If the spot market is not matched in the future, this trend will be hard to sustain.

In addition, domestic and foreign cotton prices remain at a high level.

At present, the price index of China's imported cotton under the sliding tariff level is 17770 yuan / ton, which is 1500 yuan / ton more than the Chinese cotton price index.

Domestic and foreign spreads are still at historically high levels, indicating that there is still tremendous potential import pressure, which will hinder Zheng cotton's continued rebound.

The goal of macro-control is pformed into potential pressure.

China is a major producer of cotton, and also a major textile and textile power. In addition to protecting the basic income of cotton farmers, the sustainable development of the textile industry is also a matter for the macro-control departments to consider.

At present, the price difference between the inside and outside of the textile industry due to the purchase and storage has greatly weakened the international competitiveness of the textile enterprises.

The next goal of national macro-control will turn to protect the international competitiveness of textile enterprises.

China cotton information network recently said that the first batch of sliding tax quotas in 2012 has been approved and will be issued to enterprises in the near future.

If so, the current high level cotton price difference should be further narrowed, and the rebound space of Zheng cotton will naturally be restrained.

At present, the demand and supply of the global cotton supply and demand has increased the necessity and urgency of the pformation of the macro-control target.

The January cotton supply and demand report released by the US Department of agriculture last week lowered China's expected consumption by 2.2%. The final inventory and final inventory consumption ratio increased by 9.7% and 12.2% respectively. The expected consumption of the world was lowered by 0.5%, and the end and end inventory consumption ratios were increased by 1.2% and 2.4% respectively.

The report shows that the supply and demand of cotton in China and the whole world tend to be loose.

Based on the above analysis, multiple factors have restricted the rebound of Zheng cotton.

Investors are advised to follow suit cautiously. Before the 21500 shift to technical support, they will be more likely to reduce or hold off.

Those who sell hedges should pay attention to the trend of macroeconomic regulation and control departments, pay close attention to intra and outside price spreads, current price spreads and technological trends of cotton, and try to short before CF1209 contracts exceed 22000.

Because the price is far from the temporary purchase and storage price, buying hedging should wait and see for the time being.