Cotton Collection And Storage In The New Year Is About To Start.

Cotton collection and storage will start in the new year.

The purchase and storage will undoubtedly continue to support domestic cotton prices, but it is still difficult to reverse the supply and demand pattern of the domestic market.

According to the plan for the temporary storage and storage of cotton in 2012, the purchase and storage in September 1st entered the implementation period. In August 31st, the 328 price of China's cotton price index was only 18520 yuan / ton, far below the 20400 yuan / ton storage price, which means that the storage and purchase will begin in September 10th.

However, we believe that due to the continuous increase of new supply and the difficulty of resuming the latter demand, it is not possible to fully absorb excess volume in 2011 in the 2012 year, and the market effect is not as good as expected.

Huge quantities of imported cotton wait for customs clearance

During the 2011 cotton purchase and storage period, the price difference between the internal and external markets was relatively normal, and domestic stocks were less than 3 million tons. The storage and purchase effectively absorbed the market supply, and the price was higher than the storage price of nearly 2000 yuan / ton during the storage period.

However, after the end of the purchase and storage, domestic cotton prices did not follow the external market, and the domestic and foreign cotton spreads continued to widen. The current price difference has exceeded 4000 yuan / ton, which stimulated a large number of traders to import.

USDA data show that China's cotton imports in 1960 amounted to 5 million 279 thousand and 900 tons, equivalent to 72% of the cotton output of the year, the highest value since 1960.

According to the calculation of 2 million 526 thousand and 300 tonnes of initial inventory and 7 million 293 thousand and 900 tons of output, the supply of cotton in China in 2011/2012 is 15 million 100 thousand and 100 tons, which is 6 million 391 thousand tons higher than that of 8 million 709 thousand and 100 tons, which means that in the country

After 3 million 130 thousand tons of cotton, the market supply is still over 3 million 260 thousand tons.

These cotton, which is still flowing to China, will become the largest potential supply in 2012.

Effect of National Reserve Bank on storage and storage

According to the announcement issued by the Central Cotton store, the sale of the national cotton reserves from September 3rd, the sale of the domestic cotton purchased in 2011 will be open to the public. The bid price will be 18500 yuan / ton (standard grade, fixed weight), and the daily announcement will prevail.

Due to the high quality of Xinjiang cotton in 2011/2012, the spot price is about 19400 yuan / ton.

We believe that in the short run, the auction price will be higher than the base price, which will give the market some confidence.

However, if the quantity of dumping and storage is too large, the closing price will close the bottom price, which will suppress the rising space of cotton prices.

A simple account, the cost of cotton 18500 yuan / ton, if the CF301 contract rose to 19800 yuan / ton in October 8th, enterprises sell value.

Lock price difference of about 1300 yuan / ton, time discount 404 yuan / ton, delivery fixed fee (including value-added tax) about 345 yuan / ton, without considering the cost of capital, the enterprise will get 551 yuan / ton stable income, equivalent to 9.18% of the annual yield.

We roughly estimate that the number of dumping stocks within 500 thousand tons will have a neutral effect on the market. If approaching 1 million tons, it will cause great pressure on the futures market.

More importantly, dumping will reduce the demand for new cotton. At least, the supply and demand in the early stage of the market will not be conducive to the return of the price.

Textile demand is weak and difficult to sustain.

After analyzing the 16 companies in the shwan industry index cotton spinning industry, we found that in the first half of 2012, the average operating income of the 16 companies declined by 6.91%, and net profit decreased by 44.21% on average.

Inventory value fell 2% compared to the same period last year. Considering the decline of raw materials and finished products prices, the inventory volume of enterprises should be increased compared with the same period last year.

The average gross profit margin dropped to 10.7% from 16.95% in the middle of 2011.

The financial statements show the difficulties of the current cotton spinning enterprises.

The recovery of China's textile industry needs external market cooperation.

According to the data released by the China Federation of textile industry in August 30th, after the deduction of price increase factors, the actual export volume of China's textile enterprises above designated size increased negatively from 1 to July.

In August, the main economic indicators of China's manufacturing sector continued to slow down, while the new orders index, production index and new export orders index were all lower than 50% in the PMI data of China's manufacturing sector.

It can be seen that the current situation of China's textile industry is directly related to the obstruction of exports, and the key problem lies in the lack of export.

According to our judgement, the possibility of global economic recovery is almost zero in the visible period. Therefore, the recovery of textile industry will take time and the demand for cotton can hardly be effectively increased.

Generally speaking, we do not doubt that the purchase and storage will continue to support domestic cotton prices. But based on the judgment that domestic supply and demand is difficult to reverse, I doubt that the price of futures will soon return to 20400 yuan / ton.

From the seasonality of historical data, the fourth quarter

Generally, they will go upward. Therefore, strategically speaking, they should maintain their thinking and tactics flexibly or more in line with the characteristics of the cotton market this year.