September 3, 2012 Institutional Watch - Cotton Futures

[MEIKO futures Dumping and storage bidding is expected to return to spot period.

Overnight, in August 31st, the chairman of the Federal Reserve issued a much market concern speech. He reiterated that the Federal Reserve would take action when necessary, so that investors' hopes for QE3 were not completely shattered, and the US dollar index fell sharply, and the commodity market maintained a rising trend. In contrast, ICE cotton rose little or continued to oscillate.

News shows that the Xinjiang Uygur Autonomous Region's cotton production accounts for nearly half of the total output in China's largest cotton producing region. The the Xinjiang Uygur Autonomous Region government said in a recent statement that cotton production is expected to grow from 3 million 200 thousand to 4% tons in the same period from August 1st to next year. At the same time, it is estimated that the total output of cotton in China will reach 6 million 500 thousand tons per year, while the USDA data shows 6 million 760 thousand tons.

In the international market, in August 31st, the price of China's main port of imported cotton continued to rise, but not much. Most varieties rose by only 0.25 cents. At present, there is no obvious improvement in spot trading. On the one hand, the textile factories are waiting for the exact dumping and storage information. On the other hand, they can only buy according to the order. In short, the lack of downstream demand will restrict the rising space of the outer cotton.

Domestic market, domestic cotton spot prices tend to stabilize, and downstream yarn also rebounded slightly. Recently, the state will throw the store and auction the Xinjiang cotton as the main way to take up the bid. The recent high-grade lint is more tight, and the final transaction price will be in line with the spot.

Spot quotation, August 31st, the US C/A cotton quotation is 92.85 (cents / pound), the discount general trade port delivery price is 15748 yuan / ton (calculated by sliding tax), Australia cotton 98.10, discount general trade port delivery price 16473 yuan / ton; Uzbekistan cotton 94.10, discount general trade port delivery price 15917 yuan / ton; West Africa cotton 89.35, discount general trade port delivery price 15287 yuan / ton; India cotton 89.10, discount general trade port delivery price 15254 yuan / ton. The national cotton price A index was 19576 yuan / ton, up 8 yuan; the B index was 18666 yuan, up 10 yuan.

Market analysis, recently, some areas of new cotton have been bolting, quality is acceptable and with the increase in cotton prices, cotton farmers purchase price expectations of seed cotton is also improving, the new year will provide support for the market. Due to the recent domestic high cotton tension, because the auction price is expected to gradually return to the spot price. The inside and outside market trend is steady, long thinking operation.

On the operation, many can continue to hold, the 19200 key support.

　 Wanda futures] us quantitative easing expected to strengthen support for us cotton rebound

On Friday, Federal Reserve Chairman Bernanke said the high unemployment rate deserved "serious concern". Investors expected the fed to launch a new round of government bond purchase plan or quantitative easing, which stimulated commodity prices to rebound. Meanwhile, drought in India will cause damage to cotton and may force the country to restrict exports. Investors are also concerned about the impact of Hurricane Isaac on Mississippi and Louisiana in the important cotton growing areas of the United States. On the basis of multiple favorable factors, cotton will continue to rebound on Friday, and the main contract in December will be 0.32 cents to 77.26 cents / pound, with the highest level to 77.29 cents per pound, with a trend of 77.49 cents / pound pressure ahead. It is expected that after the long holiday, ICE cotton will continue to rebound to the pressure level of 77.5 cents / pound.

Friday ICE Stage cotton A small increase, the main contract in December stabilized short term average and 77 cents / pound, the challenge of 77.5 cents / pound pressure trend, KD and MACD indicators continue to rise in a row, while the MACD index red column stable on the 0 axis of the strong region, the rebound trend does not change, December contract will continue to challenge 77.5 cents / pound pressure level, such as effective breakthrough, the upward goal will be 83 cents / pound line.

At the beginning of September, the Chinese market will enter the 2012/13 year. Although the Chinese government will issue 400 thousand tons of processing trade import quotas and sell part of its reserves, it will not substantially increase domestic market supply. At the same time, China's 20400 yuan / ton purchase and storage policy will be launched. If there is no accident in the purchase and storage policy, the large quantity of new cotton will cause the market resources to be relatively scarce. In this case, the main bear will continue to reduce the empty list and support the cotton price. Zheng Mian will maintain the rebound pattern, and the 1301 contract will challenge the 19700 yuan / tonne pressure level. Considering that the price difference structure and funds will gradually flow to the 1305 contract, it is recommended to continue to hold more than 1305 contracts. The contract is expected to challenge the pressure level of 20000 yuan / ton, and will continue to hold more than 1305 contracts before it has fallen below 19300 yuan / ton. {page_break}

[Hongyuan futures] closer does not mean that it can be achieved.

Main points

1. Price Bulletin: domestic lint: 129 level 20422 yuan / ton; 229 level 19576 yuan / ton; 328 level 18666 yuan / ton; 428 grade 17791 yuan / ton. Domestic textiles: polyester staple fiber 10390 yuan / ton; viscose staple fiber 15780 yuan / ton; C32S price 25630 yuan / ton.

2. domestic spot: domestic cotton spot prices tend to be stable, and downstream yarns have rebounded slightly. Recently, the state will throw the store and auction the Xinjiang cotton as the main way to take up the bid. The recent high-grade lint is more tight, and the final transaction price will be in line with the spot.

3. cotton imports: in August 31st, the price of China's main port of imported cotton continued to rise, but not much. Most varieties rose by only 0.25 cents. At present, there is no obvious improvement in spot trading. On the one hand, the textile factories are waiting for the exact dumping and storage information. On the other hand, they can only buy according to the order. In short, the lack of downstream demand will restrict the rising space of the outer cotton.

4.ICE cotton: in August 31st, the chairman of the Federal Reserve issued a much market concern speech. He reiterated that the Federal Reserve would take action when necessary, so that investors' hopes for QE3 were not completely shattered. The US dollar index fell sharply, and the commodity market maintained a rising trend. In contrast, ICE cotton rose little or continued to oscillate.

Summary:

In the global economic downturn, global cotton In the long run, when demand is difficult to solve, the three tier structure of global cotton prices is hard to change. The cotton processors, which meet the requirements of storage and storage, assume the role of cotton porters between China's cotton social circulation price and purchase and storage prices, and the driving force for them is money and money. When the price difference is not enough to cover the cost, the transport power will no longer exist. In this sense, before the global cotton demand has obviously improved, the circulation price of cotton in China will close to 20400 of the purchase and storage price, but closing up does not mean that it can be achieved. Zheng cotton contract in recent months to 20400 yuan / ton close to the speed will be very slow and not smooth. Operation continues on the 40 and 60 day average line to do more thinking.