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New Century Futures: Cotton Prices Will Enter A Weak Cycle.

2012/2/28 8:55:00 23

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Cotton Prices Cotton Prices Cotton Prices

International cotton prices have fallen sharply recently.

China's economic downturn, China

Textile and clothing

Exports have shrunk markedly.

The larger cotton price difference between inside and outside also largely reduced domestic cotton demand.

Cotton registered warehouse receipt and the trend of effective forecast

After the holiday, Zheng cotton futures rose rapidly in the face of pressure on the macro level, the decline in cotton planting intention and the continuous advance in storage and purchase. However, the recent rise in the supply and demand report has greatly affected the previous growth.

From a technical point of view, Zhengzhou cotton CF1209 contract weekly K line for the first time in 12 weeks to close to the 10 week average, and the weekly KD index high down to death, showing that the price of short-term fall is more likely.

For the late trend of Zheng cotton, the author believes that the state's purchase and storage may support cotton prices by the end of March, but we still look down on the trend of Zheng cotton after taking into account the potential disadvantages of demand downturn, internal and external cotton price upside down and subsequent storage and quota issuance.

USDA reports bad news

February the US Department of agriculture's global

cotton

Supply and demand report has brought more bad profits to the market.

In terms of supply, the initial inventory and output of cotton in the world were all raised, of which the initial inventory increased by 358 thousand tons, mainly due to the increase in 2009/2010 and 2010/2011 production in India.

Global production increased by 110 thousand tons, mainly due to the increase in Pakistan's new cotton listing.

In terms of demand, consumption fell by 62 thousand tons.

The final inventory was raised by 527 thousand tons to 13 million 232 thousand tons.

Global cotton consumption increased by 2.34 percentage points from last month to 55.39%, higher than the average value of 6.18 percentage points in the past 5 years.

China's cotton inventory consumption ratio also increased by 2.27 percentage points from last month to 40.95%, higher than the average of 3.89 percentage points in the past 5 years.

On the whole, supply and demand in the global and Chinese cotton market are becoming more relaxed.

Downstream demand is worrying.

Although the purchase and storage of domestic cotton prices in recent years to form support, but

Cotton price

If we can continue to go up, we should also consider the downstream demand.

On the export side, the latest figures of the General Administration of Customs show that in January, China exported about 21 billion 519 million US dollars in textile and clothing, a decrease of 0.46% compared with the same period last year, and a decrease of 1.04% in the ring ratio.

The year-on-year growth rate has been negative for the first time since the financial crisis in 2008. It is expected that the domestic textile export situation will be more severe in the future.

In terms of domestic consumption, according to the statistics of the China National Business Information Center, the growth of apparel retail sales in 50 key large retail enterprises in January slowed down significantly compared with the same period last year, slowing by 27.38 and 26.89 percentage points respectively over the 2009 and the same period in 2006.

Although sales promotion during the new year's Spring Festival has a stimulating effect on sales growth, the above data show that domestic demand is also not optimistic.

From the present point of view, cotton does not have the conditions to rise.

The price difference structure needs to be optimized.

Excessive internal and external spreads and current price differentials need to be repaired.

On the one hand, the inverted price difference between inside and outside cotton is not conducive to higher cotton prices.

Recent customs data show that the continuous price inversion pattern makes domestic textile enterprises tend to purchase cotton from abroad.

In December 2011, China imported 790 thousand and 400 tons of cotton, an increase of 71.2% over the same period last year.

At present, the CIF price of cotton is still 7% to 10% cheaper than that of domestic cotton. Once the latter quota is issued, imported cotton will have a certain impact on the domestic market.

On the other hand, there is a big arbitrage space for the current price difference of Zheng cotton.

At present, the price difference between Zheng cotton CF1209 contract and spot 328 class cotton is about 2000 yuan / ton, and there is still nearly 800 yuan / ton profit after excluding delivery cost and capital cost.

If the late price difference structure can not be straightened out, Zheng cotton uplink faces greater pressure on selling hedging.

At present, the end of storage and storage is only 1 months. According to the progress of the collection and storage after the holidays, the final reserves will be around 2 million 800 thousand tons.

The storage capacity is nearly 30% lower than the end of this year's inventory. Therefore, we expect that the effect of purchasing and storage on the supply side will not be as good as expected.

At the same time, investors should pay close attention to the policy of dumping and storage of imported cotton after import and export.

On the whole, we believe that the trend of Zheng cotton's later stage is not optimistic. It is suggested that investors should focus on empty thinking.