Cotton Futures Early Comment: Zheng Cotton Continues To Rebound

　　 [market tracking]

14 days Zheng cotton 1501, the contract continued to rebound, opening at 13620 yuan / ton, closing at 13710 yuan / ton, up 150 yuan / ton compared with the previous trading day, a slight increase in turnover and 12774 hand to 475354 hand in positions.

Cotton index 3128B price of 15155 yuan / ton, compared with the previous trading day fell 42 yuan / ton.

　　 [ Market trend ]

Fundamentals, released by the US Department of agriculture in October 10th. cotton The supply and demand forecast monthly report raised the global cotton final inventory of 180 thousand tons to 23 million 320 thousand tons in 2014/15, mainly due to the increase in initial inventory, while production and consumption also increased, but they offset each other.

　　 [operation suggestion]

The NDRC will no longer issue additional quotas for cotton imports, and will guide enterprises to use domestic cotton to boost the trend of Zheng cotton futures. Technically, Zheng cotton 1501 contract was promoted by incremental capital intervention. The strong bottom trend picked up, and the short-term bottoming signal was obvious. It is expected that there will be room for rebound in the short term.

Related links:

Treasure Island analyst Ms. Zhu believes that after a long decline in cotton prices, the possibility of reversing is not great, whether it is domestic cotton futures prices or the US cotton futures, are currently in a consolidation range of shocks, the short term is likely to continue to enter the downward trend is unlikely, if the possibility of reversing smaller.

The reason why cotton prices are now in a consolidation state is closely related to output and inventory, and the two have entered a short equilibrium state. The US Department of agriculture (USDA) released the supply and demand report shows that the US 2014/15 cotton output is estimated at 16 million 260 thousand bales. It was estimated at 16 million 540 thousand bales in September. Downgrading 2014/15's US cotton production forecast has led to concerns over tight supply in the short term. It has also become an important reason for the slight rebound in cotton prices recently.

The reduction in short-term forecasts has helped to maintain a continuous decline in cotton prices, which has led to a slight increase in cotton prices. However, some market participants say that the rise in cotton prices is difficult to sustain because the pressure on global inventories still exists, and the short-term benefits can only cause fluctuations in cotton prices within a certain range. ICAC said in its monthly report: "there is an oversupply of 1 million 800 thousand tons in the global cotton market, and China's cotton support policy has changed, and it is estimated that cotton prices will not rise to the level reached in the first two years."

Under the influence of high inventory, the price of cotton will not be optimistic in the future. Although under the influence of shortage, cotton prices may rebound slightly, but it is difficult to constitute an upward trend. Therefore, cotton prices are very difficult to rise under the short-term impact of output and the long-term impact of inventory. For the future, Guotai Junan Liu Shangqing believes that the report of the US Department of agriculture has a certain boost to the domestic cotton market. In the short term, cotton will maintain wide shocks. However, the fundamentals of cotton are still weak and the trend is still downward.