Zheng Cotton Trend Weakened, Began To Build The Bottom

In the last month,

A sharp decline of more than 10%, the spot price also followed the decline, but the relative magnitude is relatively small.

From the perspective of downstream demand, domestic demand is acceptable and external demand is acceptable.

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The price of downstream yarns has remained stable and difficult to rise.

Difficult to start downstream demand is difficult to cotton prices

The main reason.

2011/2012 cotton year is an annual production of more than 23 million of the world's total output, with a total output of 27 million tons, 23 million tons of consumption and a stock of 13 million tons.

According to the forecast data of USDA, this situation of supply exceeding demand will continue to 2012/2013 cotton year.

Despite the decline in cotton production and consumption in terms of planting area, stocks at the end of the year are still increasing.

Therefore, cotton prices have been weakening in recent two years.

The early collapse of Zheng cotton was mainly caused by the import quota of 1 million tons.

China's high cotton purchase and storage price has led to the price difference of cotton at home and abroad, and the price of cotton yarn has widened compared with previous years.

The annual import volume of the last cotton is 2 million 580 thousand tons, and the annual import volume of cotton is expected to reach 4 million 200 thousand tons. China's final stock may reach 5 million tons.

US cotton export weekly shows that Chinese textile mills and traders have signed 1 million 350 thousand tons of cotton in the United States. In the coming months, nearly 500 thousand tons of cotton and cotton will arrive in Hong Kong, and the pressure on the Port Free Trade Zone inventory is quite large.

China's total import of Australian cotton this year is equivalent to the sum of Australian cotton output over the past five years.

We believe that the import of cotton resources is the main raw material for textile enterprises in the next two months.

However, with the reduction of the imported cotton resources and the increase of the import quota price in the spot market, the main body of textile consumption will be gradually pformed into domestic cotton.

This will drive the spot price index of cotton to form the bottom.

After June, the focus of the market will be gathered to the expected output of the new cotton year.

Data show that cotton plantation has the highest labor cost, so the cotton planting area in this year is reduced by about 10%.

In 2012, according to the reduction of average per unit area and area, China's output is expected to be 6 million 550 thousand tons.

Although the government announced the new year's storage price of 20400 yuan / ton, it eased the market's worries about the sharp decline of cotton planting area. But in the long run, it is difficult to reverse the downward trend of planting intention.

Cotton futures do not rule out speculation around the weather in July and August.

The global cotton consumption will determine the long-term trend of Zheng cotton.

In the coming year, cotton consumption is expected to remain stable, and yarn production is expected to increase slightly.

According to export data in 2010 and 2011, there is a downward trend in the proportion of exports of cotton products, which undoubtedly affects the total cotton consumption of domestic textile enterprises.

Cotton consumption in 2011 was 8 million 900 thousand tons, a decrease of about 9% over the previous year.

In 2012, the export growth of Chinese yarn in the first 5 months was less than 3% (about 2.8%), while the increase in 2011 was about 20%.

In recent years, with the fluctuation of macro-economy, the order of cotton products from Europe and the United States is decreasing, and many textile enterprises are losing money.

Therefore, cotton consumption will definitely decrease this year. If the global economy bottomed out in the three quarter of 2012, the cotton prices in the next year will be relatively stable.

According to our survey of more than 100 textile enterprises, the start up rate of large textile enterprises is significantly better than that of small and medium-sized textile enterprises, but the overall volume of cotton is declining.

Large and medium sized textile enterprises have different cotton inventories. Individual large enterprises have cotton stocks for several months. Many textile enterprises are low cotton stocks and high cotton cloth stocks, and the impulse of enterprises going to inventory will inevitably affect the procurement progress of cotton in the future, and the situation of cotton shopping will continue.

Before the trend of the cotton market is rising, consumers will postpone replenishment.

In recent days, the trend of Zheng cotton was weak, and the negative factors were reflected in the anticipation of the national cotton storage and export. Affected by this, domestic cotton futures and spot prices were all down.

After the bad factors are gradually being digested, the cotton market will enter the new year's pricing cycle of acquisition and storage in September. The price of domestic cotton will fluctuate at the center of the purchase and storage price, and the market price and policy price will be gradually integrated.

But cotton prices will shrink considerably compared with previous years.

In the past two years, there is an obvious policy market. The price fluctuation of Zheng cotton is essentially a game based on different policy expectations.

In the international market, whether the Chinese policy or the India policy, the impact on cotton prices is very prominent, and the government regulation is aimed at maintaining stability.

We believe that Zheng cotton may have started building the bottom and will see a rebound trend in the coming months.