Pay Attention To The Policy Trend After The Purchase And Storage Of Cotton.

In March 31st, the national cotton temporary storage and storage is coming to an end. It is estimated that the final reserves will reach 3 million 200 thousand tons, accounting for 45% of the total domestic output (7 million 200 thousand tons).

After the end of the purchase and storage, the policy is still a key factor affecting the market. Supply and demand, especially demand, will play an important role in the market changes.

Domestic cotton policy analysis

In my view, this year's 19800 yuan / ton temporary storage.

Although the purchase and storage price of cotton in 2012/2013 increased to 20400 yuan / ton, the purchase price of seed cotton was about 4.3 yuan / Jin, but for domestic cotton growers, the price seemed to be somewhat low, and for the downstream textile and garment enterprises of cotton, the price could not be borne seriously.

This directly leads to high price of domestic cotton, and textile enterprises are reluctant to use it.

Because of the limitation of import quotas, textile enterprises are unable to get foreign cheap imported cotton.

The issuance of import quotas is also very difficult for the relevant departments. At present, the domestic and foreign cotton prices are too large, and domestic cotton planting in China is still unstable.

Late supply and demand

At present, the State Reserve is considering converting imported cotton into reserves, which is about 4 million tons.

Domestic intermediate circulation enterprises and textile enterprises have limited stock. Domestic cotton resources in Xinjiang are about 800 thousand tons, matching and 300 thousand tons of futures warehouse cotton and real estate cotton, and about 1 million tons of commercial cotton imported from 3 to August this year.

The total domestic cotton supply is estimated to be 6 million 100 thousand tons.

In terms of demand, the amount of cotton used in 3 - August was 4 million 200 thousand tons per month, based on 700 thousand tons per month (estimated by high data).

Therefore, domestic cotton supply and demand is relatively loose.

Policy trends in the late part of the year

From 4 to August, the national cotton policy mainly focused on two aspects: first, the issuance of import quotas, including the quantity and timing of the issuance; two, throwing cotton reserves.

From now until mid May, the relevant policies will be concentrated in the planting stage.

Generally speaking, cotton prices are difficult to rise and fall, and the uncertainty of the latter policy is very large.

The market will be more difficult to operate, and more volatility will fall or rebound.

In the direction of cotton operation, we buy cotton and cotton (far moon) and air cotton (near month).

As for the domestic market alone, we need to pay attention to the change of policy nodes in the future, carry out band operation and pay attention to stop loss.

Apart from policy, concerns should be paid to the downstream textile enterprises' operating conditions, the return of cotton price differences inside and outside, and the change of cotton planting intention in the northern hemisphere.

Under extreme circumstances, the spot price will drop to 19800 yuan / ton in the future, that is, the spot price of Xinjiang cotton will drop 500 - 800 yuan / ton in the late stage, and the futures contract in May may also close to this price. The price of the far month contract will fall to 20500 - 21000 yuan / ton oscillation, and the rate of reduction will be 500 - 1000 yuan / ton.

The premise of this situation is that the country is expected to issue additional quotas earlier than the market, or to start throwing storage earlier.

The pressure of Zheng cotton 1205 contract will still be relatively large, the downward trend may be more clear; and the main 1209 contract and the 1301 contract need patience to do more opportunities, and we must not blindly intervene.