October 8, 2012 Institutional Watch - Cotton Futures

Main points

1. Price Bulletin: domestic lint: 129 level 20499 yuan / ton; 229 level 19628 yuan / ton; 328 level 18752 yuan / ton; 428 grade 17914 yuan / ton.

Domestic textiles: polyester staple fiber 10920 yuan / ton; viscose staple fiber 14980 yuan / ton; C32S price 25720 yuan / ton.

2. International Spot: during the eleven long holiday period, the international cotton market was generally stable without major news.

3. macro news: according to the data released by the National Bureau of statistics and China Federation of logistics and purchasing in October 1st, the purchasing managers index (PMI) of China's manufacturing industry in September was 49.8%, up 0.6 percentage points from last month, approaching the critical point, the first rise since the 4 consecutive month of decline since May 2012.

4. Cotton Conference: in order to do a good job in the 2012 cotton business, the national development and Reform Commission, the Ministry of finance, the Ministry of agriculture, the General Administration of industry and commerce, the General Administration of quality supervision, inspection and quarantine, the supply and Marketing Corporation and the Agricultural Development Bank decided to jointly hold a nationwide teleconference on cotton work in October 9th. The conference will analyze the current cotton production and marketing situation and deploy the cotton work in 2012.

5.ICE cotton: in October 5th, ICE cotton was completely down on sale. Recently, the settlement price in October was 69.80 cents / pound, down 60 points, the main contract price in December was 71.49 cents / pound, or 60 points, and other forward contracts decreased 48-79 points.

Summary:

Eleven during the long holidays, the international cotton market was generally stable and no major news happened. In October 9th, the relevant government departments will hold a meeting to analyze the current cotton production and marketing situation and deploy the 2012 cotton work.

We believe that the three tier structure of cotton prices in China will not change until the global demand for cotton has improved significantly.

China's circulation cotton price will close to 20400 of the purchase and storage price, but closing is far from being able to achieve, because domestic textile enterprises have not yet been out of difficulty, and the latter demand is still not optimistic.

On the one hand, we must maintain the idea that cotton prices will run at a low level for a long time. On the other hand, we suggest that we should do more in the bargain market.

[MEIKO futures] cotton market rebound kinetic energy weak downward trend is difficult to change

Overnight, double section, the overall view of the outer disk

It moved slightly down and fell on Friday. As investors expected the US cotton to be productive, there was speculative selling in the market, but the market was very light.

The settlement price of the ICE12 contract was lowered by 0.83% to 71.49 cents per pound.

News, the Deputy Secretary of the China Textile Industry Federation sun Huaibin introduced that in July this year, the textile industry production growth continued to slow down, and 37 thousand Textile Enterprises above Designated Size reached 3 trillion and 146 billion 710 million yuan in total industrial output value, an increase of 10.9% over the same period last year, representing a 18.8 percentage point decrease compared with the same period last year, down 3.8 percentage points compared with the first quarter of this year.

In the international market, textile mills have become increasingly interested in buying textile products in recent years.

However, the overall downturn in the downstream demand will limit the procurement volume of textile enterprises.

In addition, with the increasing supply of cotton, the price of cotton will not be reversed.

Due to the very low demand for goods and a record oversupply expected to be achieved in the 2013 harvest year as at the end of July, the situation that cotton flows to the exchange to generate warehouse receipts will be formed.

Domestic market, domestic cotton spot prices continue to operate smoothly.

After the last reserve cotton sale and sale, the situation of temporary shortage of high-grade cotton was improved, and textile enterprises had more choices for cotton blending. However, since the development of the warehouse sales, the turnover rate was not as good as expected, and the paction price remained stable.

Enterprises have difficulty in operation, and textile enterprises have to reduce production capacity.

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Spot quotation, September 29th, the US C/A cotton 87.60 (cents / pound), discount general trade port delivery price 15045 yuan / ton (according to sliding tax calculation); Australia cotton 92.60, discount general trade port delivery price 15694 yuan / ton; Uzbekistan cotton 88.60, fold the renminbi trade port delivery price 15171 yuan / ton; West Africa cotton 85.60, discount general trade port delivery price 14795 yuan / ton; India cotton 84.35, discount general trade port delivery price 14642 yuan / ton.

The national cotton price A index was 19640 yuan / ton, up 1 yuan; the B index was 18780 yuan, up 3 yuan.

Market analysis shows that although cotton prices show signs of stabilization before the "double October" holiday in China, the continued kinetic energy is weak, and the future price will continue to fall, because the market fundamentals are not conducive to the rise in cotton prices.

With the advent of new cotton in the northern hemisphere, the market supply pressure will start to increase. At the same time, the global economy is facing downside risks. Textile mills will be difficult to operate and inventory reduction will be a strategic choice for a long time to come.

ICE or continue to explore the bottom, Zheng cotton eleven before the long shadow, attention to 19550-MA60 pressure.

In operation, cotton air is backed by rebound pressure zone.

[Wanda futures] new cotton listed supply pressure appears, cotton prices remain weak

Although the US unemployment rate dropped to nearly four years ago before the US election, the market expected that the US cotton would get a bumper harvest. Meanwhile, China and India were listed on the new cotton market. The world's largest buyer of Chinese textile enterprises could keep their stocks up to the end of December, and import quotas were in short supply. This led to the selling of cotton in the ICE stage, and the main contract on December fell 0.6 cents to 71.49 cents / pound in December.

According to the CFTC position report released on Friday, the over-the-counter fund will begin to enter the market in mid September to increase its holdings and become the biggest pressure for ICE cotton. In December, the contract will challenge 70 cents / pounds strong support position. If the support falls, the downward goal will reach 65 cents / pound, otherwise it will continue the 70-75 US cents / pound crosses area.

Friday ICE cotton small Yin collection, although the main contract in December stabilized 70 cents / pound above, but by short-term average line suppression, short-term average line system to maintain a drop in the order, KD and MACD indicators continue to fall short of alignment, MACD index is still in a vulnerable area, the decline will continue, December contract will challenge 70 cents / pounds strong support position, if the support is verified, cotton price will continue 70-77.5 cents / pound cross area, otherwise the downstream target will be 65 cents / pound line.

During the national day, the domestic cotton market was calm and relatively calm.

Despite the end of the dumping, some enterprises' stock can be maintained until the end of the year. As a result of the weak consumption, some textile enterprises will have a long vacation on national day, which will inhibit the demand for raw materials.

At present, the purchase and storage has been officially started, some enterprises have successfully entered the warehouse, and there is a trend of volume and storage. This leads to the steady purchase price of seed cotton during the national day, and the price rises slightly in some areas. Under the current market situation, new cotton is mainly imported and stored, and it will not be a pressure on the market.

However, the low price of international cotton will attract limited purchases, and Zheng cotton can hardly get the support of funds, and the overall market disadvantaged atmosphere will continue.

We will maintain a downward trend and keep a short head. We will continue to hold 1301 empty contracts, such as 19400 yuan to support the loss, and increase our holdings to 19000 yuan / ton line.