The Big Difference Between Cotton And Domestic Products Will Continue.

Before September, old cotton was not protected by storage and purchase. In September, new cotton was listed less, and the delivery was also dominated by old cotton, and domestic cotton prices were near weak and far stronger.

At the same time, because of the policy intervention on the circulation of cotton and domestic cotton, the big difference between and outside cotton will remain for a long time.

May 10th, USDA for 2012/2013 Global

The situation has made its first prediction.

The report shows that the global supply is still surplus in the new year, and the year-end inventory has increased by 10% over the same period.

As soon as the report came out, ICE cotton futures prices plummeted. The next day, Zheng cotton also dropped sharply. The main contract in September fell below 20000 yuan / ton mark, and was sealed at 4% limit plate. The annual low price of cotton index suddenly appeared.

Sliding quota import quota makes cotton market worse.

If the USDA report is the trigger for the collapse of cotton prices, then the global decline in global stock and commodity prices and the issuance of cotton quotas in China will be a prelude to the weakness of cotton prices.

The continued recovery of the US economy has reduced the possibility of the launch of QE3, coupled with the rise in the European debt problem and the decline in investor risk appetite. The US dollar index has risen 1% and the CRB index has fallen 9.5% for 8 consecutive days.

Some domestic enterprises reflect that they have received notice of sliding quota tax quotas, which is undoubtedly exacerbated by the lack of price advantage and weak domestic demand.

China cotton information network data show that in April cotton textile enterprises used imported cotton for eighth months and remained above 50%, only 26.95% in September last year.

Supply and demand structure is the core factor determining price.

New and old year,

Oversupply is an indisputable fact.

Due to sharp increase in production and shrinking consumption, the inventory consumption ratio has risen sharply this year, and the large initial inventory has also kept the inventory consumption ratio in the new year rising to a historical extreme.

USDA forecasts that this year's inventory consumption ratio will rise by 18.8 percentage points to 62.8%, while the new year will reach 67.1%.

ICAC predicted a 18.9 percentage increase this year, to 56.4%, to 59.4% in the coming year.

Judging from the inventory cycle, it is still in the slow going inventory cycle, and the production and consumption capacity is insufficient.

Statistics show that the total commercial inventory in April was 2 million 420 thousand tons (including cotton and cotton entering the circulation link, excluding national cotton reserves), which was 450 thousand tons less than that in March. The inventory of lint was slow and the profit was low. The main body of Ku Cunzhan market was small and medium-sized.

In terms of consumption, the 11 Canton Fair, which just ended in early May, clinch a turnover of US $36 billion 30 million, down 4.8% from the previous session.

From this point of view, cotton prices will also be suppressed for a long time.

It is noteworthy that in May 3rd, Shandong Wei Qiao sharply raised the price of cotton yarn, which affected textile enterprises to raise their quotations ranging from 300 to 500 yuan / ton.

Up to now, the price of textiles in Jiangsu, Zhejiang, Guangdong, Fujian and other regions is still strong.

High cost and low price lead to low profit of textile mills. This is also a reason for the low operating rate of textile mills.

The stimulation of price increases to production starts, and the rate of de stocking will accelerate.

From the survey of enterprises, textile enterprises are looking for low cost, import and export of low priced cotton yarn such as India and Pakistan, and most of them are low count yarn, and the sale of domestic low-quality yarn is not smooth. Takashina Sahisaka can foresee that the textile pattern will gradually move towards quality production, which is also related to China.

The 8 day of the Confederation coincided with the outline of building a textile power (2011-2020 years).

Policies affect price expectations

The policy of purchasing and storing is undoubtedly the strongest support for the new and old cotton prices. The adjustment of monetary policy also has a positive effect on market confidence.

The NDRC has formulated the plan for the unlimited storage and storage of cotton in the 2012/2013 year. From September 2012, the cotton purchase and storage price was 20400 yuan / ton, and the guidance of the policy remained unchanged.

At present, Zheng cotton is at the bottom of the policy, and the price of the new annual contract will be repeated around 20400 yuan / ton.

On the evening of May 12th, the central bank lowered the deposit reserve ratio by 0.5 percentage points. It was the third successive reduction since the opening of the deposit reserve ratio in November last year. The main purpose is to ease the liquidity pressure of the banking system and avoid the credit contraction affecting the real economy. It is good news for businesses and individuals, and it will also promote market expectations, especially the stock market.

It is still the main investment idea for the cotton market this year to collect short wave bands in the area above the reserve price. However, the macro and intra industry policy change is a risk point that needs to be avoided.

20400 yuan / ton is an important support position for cotton price. Before September, the old cotton was not stored and stored, and cotton price was not bottomless. In September, new cotton was listed less, and the delivery was also dominated by old cotton.

Under such logic, domestic cotton prices are weak and far from strong, and they can be invested far and near.

Because of the increase in exports this year, the tight circulation in the market, and the shrinking demand worldwide, the price of forward cotton is not favored by the market.

At the same time, the difference between domestic and foreign cotton prices remained high.

The statistics of China's cotton net in May 11th showed that the domestic B index of grade three cotton was 19382 yuan / ton, and the M index of imported cotton was 92.93 cents / pound, which was converted into RMB 15119 yuan / ton, and the difference between inside and outside was as high as 4263 yuan / ton, which increased by 1000 yuan / ton compared with the same period last month.

Because of the policy intervention in the circulation of cotton and inside and outside, the price difference between inside and outside will exist for a long time. Therefore, it is not recommended to make arbitrage between inside and outside.