October 29, 2012 Institutional Watch - Cotton Futures

[Hongyuan futures] storage and purchase period to do more

Main points

1. Price Bulletin: domestic lint: 129 level 20520 yuan / ton; 229 level 19645 yuan / ton; 328 level 18791 yuan / ton; 428 grade 17969 yuan / ton.

domestic

Product: polyester staple fiber 10690 yuan / ton; viscose staple fiber 14360 yuan / ton; C32S price 25665 yuan / ton.

2. domestic spot: domestic cotton spot prices continue to operate smoothly.

State purchasing and storage high protection prices continue to curb the purchase of textile enterprises to real estate cotton, with the expansion of the difference between inside and outside cotton, a small number of textile enterprises choose 40% tariff import low price cotton.

3. imported cotton: in October 26th, the price of imported cotton stabilized after several days, and the prices of all varieties remained stable.

At present, the price of new cotton will continue to appear in a large number of listed companies, and textile mills do not seem to have fallen in place, so the decline has failed to stimulate more downstream demand.

4. the purchase and storage of new cotton: in October 26th, China cotton reserve management company plans to store and store 131200 tons of cotton in 2012, and the actual turnover is 71360 tons, with a turnover rate of 54.39%.

As of October 26th, 2012 cotton temporary storage and storage pactions totaled 1544360 tons, of which 378480 tons were traded in the mainland and 1165880 tons in Xinjiang.

Phase 5.ICE cotton: the first four contracts in the 26 days ICE cotton fell slightly, the recent December contract closed at 72.42 cents / pound, fell 31 points, 1303 contracts 72.89 cents / pound, fell 8 points, and other forward contracts were mixed.

Market volume continued to fall.

Summary:

The early market worried that the quality of the new cotton quality in the United States is too high, which can not generate warehouse receipts, nor is it acceptable for textile mills. However, under the background of weak cotton demand and large inventory in China, the quality problem of US cotton is not enough to significantly affect cotton prices in China.

Next, Zheng cotton still takes stability as the keynote, and has limited space in the storage and purchase period. The author focuses more on the strategy of lowering prices.

At present, CF1301 has some support near 19550, and there are 19450 strong support underneath.

CF1305 opened low on Friday, and CF1305 closed more than 4.5 million hands.

CF1305 closed at 19330 yuan / ton, down 115 yuan / ton, increased 7768 positions; in October 26th, China's imported cotton (FC Index M) 85.21 cents / pound, up 0.45 cents / pound, 1% yuan tariff reduced price 13791 yuan / ton, sliding price conversion price 14679 yuan / ton.

According to New York's October 26th news, the US cotton futures fell again on Friday, and recorded the highest single week decline in mid May. Because the market is worried about the tight domestic supply in the US, the US harvest is underway, and the market is still short of demand.

ICE12 month cotton settlement price quoted 72.42 cents per pound, down 0.43% on that day.

In October 26th, the cotton trading market in the national cotton trading market reached 11020 tons, a decrease of 1260 tons compared with the previous trading day, an increase of 100 tons of orders, and a total purchase of 61540 tons.

On the 26 day, the contract was opened up, and within a wide range of days, the final price fluctuated.

Basically, under the influence of poor spot sales and far below the cost of collecting and storing, the focus of the cotton business at this stage is on the storage.

As of yesterday, the storage capacity has reached 1 million 475 thousand tons. According to the current situation, about 500000 tons of cotton and 400 thousand tons of trade quota in September were consumed, and no regulation was implemented in the country.

On Friday, Zheng cotton went down and left, and there was a great pressure on the 05 contract in the beginning of the month. Cotton intertemporal arbitrage can gradually come out, and the 05 contract has reached the target level.

Today's operation suggests that the CF1305 reference price range is 19300-19600.

Overnight, in October 26th, ICE futures rose 73 cents after opening, but most of the subsequent trading periods were below 73 cents. Because of the poor trend in the soft commodities and grain markets, the market was hard to see buying and the volume was shrinking.

At present, the market demand is still insufficient, and a large number of US cotton listed eased the market's worries about the short term supply, and the downward pressure on cotton prices in the future is very great.

Recently, a number of foreign agencies and foreign trade enterprises have been rumored that the state plans to throw their stores in November. According to the current high grade Xinjiang cotton enterprises, almost 100% of them are used for storage, and the port free trade zone and the far month shipping period are not large enough for the high grade flowers in the United States and cotton. In addition, in 2012, the state can no longer issue cotton import quotas, and the real estate cotton is generally four or five class.

In the international market, 26 days, the price of imported cotton stabilized after several days, and the quotations of all varieties remained stable.

At present, the price of new cotton will continue to appear in a large number of listed companies, and textile mills do not seem to have fallen in place, so the decline has failed to stimulate more downstream demand.

Overall, there is still room for further adjustment after the adjustment.

Domestic market, 26, domestic cotton spot prices continue to operate smoothly.

Because of the support of the state's unlimited purchasing and storage factors, cotton prices may be slow to close to the reserve price.

However, after the end of the purchase and storage, the possibility of dumping is very large, because although the textile enterprises have difficulty in survival, in order to maintain production, there is still a need for cotton, and it will become an inevitable choice when the market does not have much cotton available.

{page_break}

In October 25th, the national cotton temporary storage and storage business reached 77230 tons. As of that date, 2012 cotton temporary storage and storage pactions totaled 1473000 tons in 2012, including 351720 tons in the mainland and 1121280 tons in Xinjiang.

Spot quotation, October 26th, the US C/A cotton 87.60 (cents / pound), discount general trade port delivery price 14968 yuan / ton (calculated by sliding tax); Australia cotton 93.60, discount general trade port delivery price 15741 yuan / ton; Uzbekistan cotton 89.60, discount general trade port delivery price 15220 yuan / ton; West Africa cotton 85.35, discount general trade port delivery price 14692 yuan / ton; India cotton 83.60, discount general trade port delivery price 14481 yuan / ton.

The national cotton price A index was 19647 yuan / ton, up 1 yuan; the B index was 18793 yuan, up 1 yuan.

Market analysis, weak capacity of the industry, resulting in cotton enterprises still focus on purchasing and storage. The competition in the territory has been fierce. The phased policy has been supporting the cotton price. The trend is not optimistic about the cotton market in the first half of 2013. Once the Chinese government purchases and stores, the domestic and foreign cotton will have a strong expectation of falling back.

The outer disk returned to the 70 line of support, with a lot of pressure on top of it.

Operation, the early empty single continue to hold, see the 60 day average line performance.

[Wanda futures] weak demand, US cotton continues to fall

Before the US election, some investors chose to leave the field and wait for the market. Meanwhile, the market worried about the tight domestic supply in the US. The new cotton market in the United States and consumption remained weak. This led to the continued decline of cotton in the ICE period on Friday, and the main contract in December fell 0.31 cents to 72.42 cents / pound.

In recent years, global consumption is showing no signs of improvement. The pressure of supply from the new cotton market will continue to suppress cotton prices and remain empty. It is expected that the December contract will challenge 70 cents / pound strong support.

Friday ICE cotton fell slightly, the main contract in December closed below the short-term average, KD and MACD indicators have formed a downward trend of adhesion, MACD index red column began to shorten, the decline will continue, December contract price challenge 70 cents / pounds strong support position.

Although China has entered 86% of the public inspection cotton, the new cotton resources are scarce, but this can not support the cotton price. Because of the continuous decline in consumption, Zheng cotton is hard to get the support of active buying.

On the other hand, the capital starts to extend to the 1305 contract, and the pressure on the inventory will gradually appear in the near future, and the price difference between the inside and outside of the contract will remain high. China's exports will shrink and its consumption will be sluggish.

It is difficult to attract the attention of textile enterprises. Therefore, Zheng cotton will maintain a downward trend, keep short ideas and continue to hold empty list, short-term target to 19400 yuan / ton line.