The Cotton Market Is Always Hard To Understand.

This year, domestic cotton production has been greatly reduced, which has been recognized by the market. At present, the purchase of seed cotton in Xinjiang and the mainland cotton region is coming to an end. At the same time, the psychology of cotton farmers reluctant to sell in the spring festival area has weakened.

In addition, domestic cotton yarn and other downstream cotton products prices are still in the doldrums. Textile enterprises are reluctant to hoard goods and replenish their stores.

Cotton prices showed a weak rebound.

Customs data show that in November 2015, China's textile and clothing exports amounted to 21 billion 982 million US dollars, down 7.07%, down 9.71% from the same period last year.

As of November 2015, textile and clothing exports grew negative year-on-year in 10 months this year, and the growth rate is still negative.

It can be seen that the downstream consumption demand of cotton is still not optimistic.

Recently, Zheng cotton main contract 1605 continued low oscillation, seems to have a rebound intention, but the market has no obvious positive factors support.

This year, the global cotton market showed a shortage of supply, but because of the high inventory at the end of the year and the weakness of downstream consumption, cotton prices showed a weak rebound.

The US Department of agriculture's latest supply and demand data show that the estimated global cotton output in 2015/2016 is 22 million 580 thousand tons, 3 million 353 thousand tons less than the previous year, and the global cotton consumption increased by 221 thousand tons to 24 million 252 thousand tons over the previous year.

Global cotton production has declined sharply and demand has increased slightly, making the supply and demand pattern of the global cotton market changed from last year's surplus to the current shortage, with a shortage of 1 million 672 thousand tons.

However, the global cotton end of year inventory forecast value of 22 million 729 thousand tons, although 1 million 659 thousand tons lower than the previous year, but still at a record high.

However, if we exclude domestic inventory data, we can see that the global cotton end inventory and its inventory consumption ratio data are not as obvious as those of previous years.

That is to say, the trend of global cotton in later stage also depends on the "color" of domestic cotton stocks.

At present, the mainstream purchase price of seed cotton market in Hebei, Cangzhou, Hengshui and Baoding is 2.85 - 2.95 yuan / jin (39% of lint and 10% of moisture regain), and cotton farmers sell cotton more positively.

The first reason is that the longer the seed cotton storage time is, the harder the quality is, the more difficult it is to ensure that the quality of cotton is stored in a simple shed. Cotton farmers are willing to sell the seed cotton before the Spring Festival. Two, from the prospect of the seed cotton purchase price trend, because the cotton mill will be shut down gradually, the market purchase needs to be reduced, the seed cotton price will decline, and the cotton farmers' holding up mentality will basically disappear; three, the cotton price subsidies will be issued in some parts of Xinjiang.

It was 1.2 yuan / kg, which prompted cotton growers in Xinjiang to speed up the sale of seed cotton, and local cotton ginning plants also sold lint in time.

Yang Zhijiang believes that the domestic cotton market for this year's shortage of new cotton production needs to be staged. If demand recovers slowly, then the enthusiasm of the market for the theme of the sale is limited under the influence of the national cotton store's selling expectations and huge inventory.

"It is expected that the national cotton reserves will be sold in 3 to July next year, but the selling price is not well established."

In the long run, demand remains the core factor determining the trend of domestic cotton prices.

Yang Zhijiang believes that if the market demand increases suddenly, then the domestic cotton price rise can be expected.

If domestic demand continues to be sluggish, domestic cotton prices will not be optimistic. The market price of cotton will fluctuate around the selling price of national cotton reserves.

"This year, the reduction of new cotton output has been digested for the good price, and the current cotton growers and ginning plants are actively shipping to increase the supply of the market, and the price of seed cotton and lint is steadily decreasing.

Now the focus of the market is the number and price of future cotton sales.

There is a large stock of state-owned cotton stocks, and there may be a price sell-off in the future, which is an important factor affecting domestic cotton prices.

Yang Zhijiang, general manager of Shanghai Century Avenue business department, told the futures Daily reporter that the quantity and quality of domestic cotton and the cost and quantity of imported cotton and imported yarns are basically expected. The only thing that is not expected at present is the quantity and price of the sale of state cotton.

Since the beginning of the Spring Festival in January, the plan for the Spring Festival holiday of the mainland cotton textile mills has been released, and some cotton processing and business enterprises are eager to ship cash and expect the 1/2 months to arrive at the bonded 2015/16. The number of cotton, cotton and Uzbekistan cotton in India will rise sharply and the interest rate will be reduced. The domestic cotton, Xinjiang cotton and real estate spot will be weak. The lowest point of the CF1605 contract will be 11125 yuan / ton.

However, the author believes that the downward adjustment space has been quite limited in terms of the peripheral market or the cotton market itself.

The reasons are as follows:

First, the mystery of Xinjiang cotton output in 2015/16 is unveiled. The pressure of supply and demand of high-grade cotton will run through the whole cotton year.

According to the national cotton market monitoring system data, in 2015, the total output of cotton in Xinjiang was estimated to be 3 million 669 thousand tons, a decrease of 14.9% over the same period last year.

Moreover, from the feedback of cotton mills in the mainland, cotton operators and inner cotton enterprises, the impact of spinning is not only the low length of cotton fiber (27mm and below), but also the high horse value (most of the C2 in South Xinjiang is more than 60% or even 70%), and the serious shortage of fracture strength is even more prominent. The influence of cotton textile mill purchase is even more prominent. From the southern Kashi, Akesu, Korla to Kuitun, Shihezi and other cotton areas in Northern Xinjiang, the enterprises with more than 50% of the strength of S3 in the middle and late stages are everywhere. So how many "double 29" and "double 28" lint can be selected by cotton enterprises? It is expected that after March, it will be able to come out.

Two, the RMB dollar depreciation trend was established, and the cost of imported cotton continued to rise.

In January 6th, the exchange rate of RMB against the US dollar accelerated again, and the spot exchange rate on the shore dropped by 6.55 yuan day, refreshing its low level in the past four years, and the offshore RMB was suppressed before the 6.7 yuan integer fall. Some institutions and investors analyzed that the devaluation rate of the RMB in 2016 reached 15%. Therefore, if foreign exchange and exporters are unable to negotiate the exchange rate, Chinese buyers will be very cautious even if the import quota of cotton is sufficient.

Three, the national cotton store's rotation is not to suppress cotton prices for the purpose, but to meet the needs of cotton textile enterprises.

For the cotton price trend in the first half of 2016, the time points of the national cotton store and the bid price are the key factors. In view of the demand pressure of domestic high grade and high quality cotton in 2015/16, timely rotation of high quality national cotton stores to meet the needs of textile enterprises matching cotton seems to be duty bound. But before the start of the wheel storage policy, it is necessary to take account of the survival condition of cotton growing areas such as the domestic cotton planting area and cotton ginning plants in 2016, and the cotton target prices directly supplement the income of the farmers.

Some cotton enterprises believe that from 2014, the State Cotton Storage and delivery business is not satisfactory. The color, strength, horse value, impurity, length and other indicators of the national cotton store are still worrying. The role of the national cotton mill is likely to be icing on the cake rather than providing timely help.