Cotton Has Limited Space And Investors Have Eaten A "Reassurance".

Data show that the US Department of agriculture predicts that the end of this year's global cotton stocks will reach 24 million tons, a record high of second.

At the same time, the industry estimates that China's national cotton reserves are currently about 10 million tons, accounting for more than 40% of global inventories.

"The government also does not want to have a negative impact on the market, preferably when the price of cotton is stable and supplies are tight.

From the supply and demand balance sheet, there may be a certain degree of tension in the market before and after September, so it is also feasible to throw the store.

Huang Shanghai said.

According to the latest news, Gao Fang, executive vice president of China Cotton Association, said Thursday that China's cotton production in 2015/2016 is expected to be 5 million 860 thousand tons, down 9.8% from 2014/2015, which is also slightly lower than the latest estimate of the US Department of agriculture (5 million 880 thousand tons).

Everbright futures analyst Xu Aixia believes that this has little effect on cotton prices, "we are not optimistic about consumption in the next one or two years, and the inventory process is still very slow and hard."

"Considering the overall downturn in the cotton market, this year's cotton production will also be positive and steady, and will be carried out in an orderly manner before the new cotton is listed on the premise of not reducing market prices and keeping the market running smoothly."

On June 11th, Yin Jian, director of the economic and Trade Department of the national development and Reform Commission, said at the 2015 International Cotton Conference.

According to the government's relevant statement, the reserve cotton will go out to the market step by step, and the quota of imported cotton will continue to be controlled. Therefore, the cotton throwing price will be limited to cotton prices, and the space for the decline of cotton futures prices is expected to be relatively limited.

Domestic and foreign cotton prices are under pressure.

Huge, even El Nino expectations do not seem to have been lifted.

Since reaching a high level of 13640 yuan / ton in May 5th, the price of zhengmian futures has been declining, and the total decline has been 5.84%.

"The trend of the market has always been reflecting the expectation of dumping.

Therefore, even in the case of strong external cotton and no excess domestic circulation, prices have remained relatively low.

Huang Shanghai, an analyst with Yangtze futures agricultural products, said.

For cotton

Chen Xiaoyan, the galaxy futures researcher, thinks there are three main points: first, the most serious year of cotton supply exceeding the demand in 2014/15. The global inventory consumption ratio has reached the highest level in nearly forty years. Although 2015/2016 has entered the inventory cycle, the global and national treasury stocks are still at a high level, and the inventory is still pressing against cotton prices.

Two, there are structural problems in domestic cotton, low quality and low grade.

Oversupply is more serious. Cotton producers sell the cotton that is difficult to sell through the futures market of the production warehouse. A large number of cotton futures orders are priced at a lower level. Three, a large number of imported cotton yarns are required to suppress demand.

In the view of the comprehensive international cotton conference, Chen Xiaoyan thinks there are three points to note: first, the cotton planting area in China decreased in 2015/2016, but the decline is limited; two, the digestion of national stock and inventory is a key point of the cotton policy in the later stage, but the way is to keep the market price as low as possible. Three, it affirms the positive role of the Cotton Subsidy Policy to the market pricing, and the cotton policy in the later period is more focused on the medium and long term and overall strategy, and pays attention to the reasonable guidance of market expectations and internal and external coordination.

"Based on the above three points, I think cotton policy will continue to control imported cotton quotas and cotton reserves will go out to the market step by step, but the cycle will be longer.

Later, the cotton price center shifted from 2015, but it is hard to form an obvious unilateral trend market in the next two years.

Chen Xiaoyan said.

Looking ahead, Huang Shanghai said, because the dumping and storage will not be too bad for the market, futures prices will have a relatively limited drop in space.

In the early September, the shortage of demand was basically eliminated. If the price of the 1601 contract was pulled down, it would be a good buy point at around 13000 yuan / ton.

"Selling 9 to buy 1 arbitrage opportunities has existed for a long time, which is also the biggest investment opportunity brought to the market."