August 16, 2012 Institutional Watch - Cotton Futures

Main points

1. Price Bulletin: domestic lint: 129 level 20294 yuan / ton; 229 level 19436 yuan / ton; 328 level 18524 yuan / ton; 428 grade 17617 yuan / ton.

Domestic textiles: polyester staple fiber 9730 yuan / ton; viscose staple fiber 15050 yuan / ton; C32S price 25380 yuan / ton.

2. domestic stock: with the approaching of the time window for storage and purchase, the policy will become the primary factor affecting cotton prices in the short and medium term.

3. imported cotton: in August 15th, the price of China's main cotton imports rose slightly, and the varieties were raised by 0.25 cents.

At present, downstream demand is still insufficient, but China's confidence in Cotton Traders has been encouraged.

In 2011/12, when China imported large quantities of cotton into its reserves, the import volume of cotton imports from textile mills rose sharply.

4.USDA: according to the global cotton supply and demand forecast released by the US Department of agriculture (USDA) on 10 th, the global cotton output in 2012/13 is 24 million 844 thousand tons, which is expected to increase by 64 thousand tons compared with July. The consumption of 23 million 548 thousand tons in the new year is reduced by 179 thousand tons, the trade volume is 8 million 100 thousand tons, the reduction is 40 thousand tons, the end of the stock is 16 million 257 thousand tons, the increase is 495 thousand tons, and the stock consumption reaches 69.04%, which is increased by 4.71 percentage points compared with 2011/12 year.

5.ICE cotton: August 15th cotton ICE main contract rose, the performance is still weak, not as strong as Zheng cotton.

The reason for this is that the United States does not have the support of China's cotton policy.

Summary:

The two major factors that affect domestic cotton prices are demand and policy. There is no substantial change in demand.

With the approaching of the new cotton year, the policy will become the primary factor affecting cotton prices in the short and medium term. Cotton enterprises expect cotton prices to come closer to the purchase and storage price. Under this expectation, there is limited space under zhengmian.

And Zheng cotton and Mei cotton are different in policy, or lead to inconsistent trend in the near future.

I insist that the central line of Zheng cotton fall back gradually into many single ideas unchanged.

The short term pays close attention to the pressure of 19700 yuan / ton at the top of the platform.

Wanda futures] US cotton continues to rebound with the peripheral market.

Although investors are increasingly worried about the slowdown in China's economy, and the market will cool the expectations of the Federal Reserve to launch a new round of action to support the economy, the main cotton producing areas in the United States are favorable for cotton growth, but these do not constitute a pressure on the agricultural products and the cotton market. On Wednesday, the strong CBOT soybean rose to drive ICE cotton up. The main contract in December rose 1.02 cents to 73.11 cents / pound, which made cotton price get rid of the suppression of the USDA negative monthly report.

At present, the cotton market lacks substantial profits, and the severe supply of global demand is shrinking. Cotton prices are hard to get rid of the low side pattern, and continue to pay attention to the cross border area of 70-75 cents / pound in December.

Wednesday ICE cotton rose, the main force 12 contracts stabilized above the short-term average, but the KD and MACD index continued to fall short, the MACD index red column shortened, cotton prices are still in a weak position, the rebound is not Cola view, ICE cotton will maintain a low level of shock pattern, continue to pay attention to 70-75 U.S. cents / pounds of the horizontal area.

On Wednesday, Zheng cotton increased its position and broke up.

However, from the post office position, the rebound cotton price was depressed by active selling, although the domestic resources had a tight trend, but the downstream consumption pattern did not improve, which became the main pressure to curb the rebound of cotton prices.

The new year is drawing near, and the policy of purchasing and storing 20400 yuan / ton starts in September 1st. This is the only way to rely on the long majority. However, we believe that under the condition of low international cotton prices, the textile enterprises have limited bearing capacity for raw materials. Although spot cotton prices are close to the trend of 20400 yuan / ton, they can not be accomplished overnight. They are not optimistic about the rebound. They are not suitable for the current market to catch up and fall. 1301, the short-term rebound of the contract may continue, challenging the 19700 yuan / tonne pressure level.

[mainland futures] demand for cotton remains weak.

[international spot]

In August 15th, under the influence of commodity futures generally rising, the ICE cotton jump was opened high, but the 10 day average line was suppressed, and the market turnover was less than ten thousand hands. The increase was not able to continue to expand, and after December, the contract closed up 102 points.

Analysts said that at present, the market is more concerned about China's policy, and that a certain number of low-priced quilts pported to China's conservative area for sale, is expected to be released tonight in the USDA US cotton export weekly report.

[International Futures]

August 15th, China

The national cotton price A index (CNCotton A), which represents the price of 229 grade cotton in the mainland, is 19447 yuan / ton, down 1 yuan compared with August 14th. The national cotton price B index (CNCotton B), representing the 328 grade cotton price in the mainland, is 18532 yuan / ton, unchanged from August 14th.

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[domestic stock]

In August 15th, after the opening of the zhengmian cotton, it continued to consolidate under the 5 day moving average, followed by the rising commodity market in the afternoon, hitting the recent high point in the trading session, and a slight fall in the late market. Most of the contracts rose more than 100 yuan, and the market turnover increased sharply.

Among them, the average price of the CF1209 contract was 18645 yuan, up 140 yuan; the average price of the CF1211 contract was 19085 yuan, up 100 yuan; the average price of the CF1301 contract was 19430 yuan, up 140 yuan; the total turnover of the market was 303626 hands, 121840 more than that of the previous trading day, and 403758 hands were accumulated, increasing the 922 hand.

[domestic futures]

The training of purchasing and storage has begun, and Xinjiang has acquired sporadic acquisitions.

This week (August 8-14), the domestic cotton market prices continued to slightly upward trend, of which the average price of the national cotton price A index (CNCotton A) representing the 229 grade cotton prices in the mainland is 19445 yuan / ton, up 6 yuan / ton compared with last week; the average CNCotton price of the national cotton price B CNCotton (328 B) is 18531 yuan / ton, representing a 3 yuan / ton increase; the average price of 428 cotton is 17625 yuan / ton, rising by 4 yuan / ton.

[cotton information]

Cangzhou, Hebei: cotton will be cut, and the price of lint will rise.

In August 15th, the weather in Cangzhou, Hebei became clear. 14 days of rainfall caused most of the cotton fields to be wet. There were accumulated water in some plots and lodging appeared in the cotton plants.

Early rainfall continued to cause cotton production reduction this year. It is estimated that the local cotton yield per unit area will be around 380 Jin / mu, a decrease of 5%-10% compared with last year.

In August 15th, the 3 grade lint price was quoted at 18700 yuan / ton (pick up, gross weight, with the same ticket), weak 3 level 18400 yuan / ton, 4 level 17900 yuan / ton, 5 level 16300 yuan / ton, all of which increased by 100 yuan / ton compared with 14 days, up by 13 yuan / ton compared with 13 days.

Linqing in Shandong: the whole growth is good, and Verticillium wilt is mild.

In recent years, there were more rainfall in Linqing in Shandong, and the soil moisture in the cotton field was saturated. After the weather cleared, the surface temperature increased, the humidity increased, and the ventilation was poor. 5% of the cotton plants were mildly Verticillium wilt.

At present, cotton farmers sprayed pesticide in time to effectively control the spread of the disease. The incidence of the disease has not yet seriously affected cotton growth. Cotton is generally growing well, better than the same period last year.

Linquan, Anhui: early drought eased and cotton bolls scattered sporadically.

On August 9-14, Linquan in Anhui was dominated by rainy weather, and the cotton field was relieved. However, affected by early drought, the overall growth of local cotton was generally high. The average plant height of spring sowing cotton was 140cm, fruit branches were 14 / plants, buds 18 / plants, decreased by 6% over the whole year, and 18 peach / peach plants.

It is expected to concentrate on picking new cotton in the first half of September. If there is no natural disaster in the late period, the yield of seed cotton will be around 190 kg / mu.

Xinjiang: cotton enterprises begin to overhaul the equipment. It is expected to start weighing in mid September.

At present, the weather conditions in Xinjiang are basically normal. The cotton plants in Shihezi, Kuitun, bole and other cotton regions have begun to stir up the wadding. Due to the excessive rainfall in Akesu in 7 and August, the opening period of the purchase is expected to be postponed to mid September.

It is understood that recently, some workers in Akesu ginning factory are busy repairing machines to prepare for the new cotton processing.

However, due to the significant decrease in the number of mainland cotton mills and trading enterprises in the Xinjiang package factory this year, the willingness of commercial banks to purchase and marketing loans for cotton in 2012/13 declined significantly.

In recent years, because of the difficulty in processing, buying, selling and managing bulk commodities such as agricultural products and cotton, some cotton manufacturers in the mainland have suffered serious losses and will need several years of recovery.

Turpan, Xinjiang: some cotton enterprises are opening up scales.

It is understood that at present, some cotton enterprises in Turpan, Xinjiang, have started buying new cotton, which is basically the same as last year's scale. The daily purchase amount is only a few hundred kilograms. After processing, cotton enterprises are mainly sold to clothing factories.

In August 15th, the seed cotton purchase price was 8.5 yuan / kg (lint 36%), according to the cottonseed 2.1 yuan / kg calculation, the lint processing cost was about 20000 yuan / ton.

India: bullish factors weaken, cotton prices tend to smooth.

According to Reuters reported on August 14th, India's domestic cotton prices are expected to fluctuate in a narrow range this week, because the reduction in cotton mill procurement and the fall in international cotton prices are expected to ease the tight supply situation in China.

In August 14th, the spot price of S-6 in India dropped by 300 rupees to 38200 rupees / Kandeh (about 88 cents / pound).

A trader in Gujarat said that the recent international market price dropped and there was no bullish factor in the short term, so the purchase of India textile mill has begun to slow down.

Earlier, the tight supply of cotton and the decline of international cotton prices in India prompted the expansion of India cotton mills' demand for foreign cotton.

Last Friday (August 10th), the US Department of agriculture sharply raised global cotton stocks to a record high. ICE futures continued to fall, triggering market fears of global oversupply and falling demand.

today

After the opening date, it continued to consolidate under the 5 day moving average, followed by the commodity market rising in the afternoon, hitting the recent high point in the trading session, and slightly lower in the late market. Most of the contracts rose more than 100 yuan, and the market turnover increased sharply.

However, downstream demand for cotton remains weak, and investors should not expect too much of the rebound in cotton prices.

Although there are supporting factors such as the purchase and storage policy and the continuous reduction of cotton warehouse receipts in Zhengzhou City, these factors are difficult to play a decisive role until the cotton demand is substantially improved.

Operation suggestion: light warehouse should be held cautiously and stop for 10 days.