In 2016 Cotton Reserves Are About To Come Out? What Are The Implications For The Spot Market?

Recently, on the market

The rumors are endless, and a version is "more rigorous than one version". In addition, during the Spring Festival, the ICE futures market "diving", Zheng cotton, electronic matching and other major contracts fell, cotton enterprises worried and panic.

Xinjiang cotton minimum bid price of 10040 yuan / ton, triggering some cotton mills, traders cotton prices will fall below 10000 yuan / ton infinite reverie.

You need to break 10000 yuan / ton, do you know cotton growers?

According to the author's understanding, the information about throwing and storing is nothing more than the following points: 1. The price of throwing and storing will be weighted according to the imported cotton price index released by China Cotton Association, plus tariff and value-added tax. According to the current index, the price will be about 11400-11500 yuan per ton. The key issue is the trend and amplitude of ICE. 2, throwing storage will give priority to bidding for Xinjiang cotton, which is imported into 2013 in the 2013 year (even Xinjiang production and Construction Corps), to meet the demand of cotton enterprises for high grade and high quality cotton. 3, the starting time of throwing and storing will be in early April, not the middle of March, which is supposed to be in the early March by the early institutions and media. The first batch will be 500 thousand tons or 1 million tons.

If the rumor is true, what will be the impact on the spot market?

First, the price is suppressed or not obvious.

For example, the main contract of ICE is around 58-60 cents / pound or even higher. The reserve price of national cotton auction is not low, and its impact on spot price is lower than expected. However, it is horrible that the sudden increase of cotton social resources makes cotton textile factories and traders purchase space greatly increased, and the sales progress of Xinjiang cotton and local cotton production will continue to slow down.

Two, is conducive to resist the invasion of low price yarn.

On the one hand, the reserve cotton wheel can restore the production capacity of the small and medium sized mills, reduce the dependence on imported cotton yarn; on the other hand, it is conducive to further linking up the prices of cotton and cotton yarn both inside and outside; the spinning enterprises that are conducive to spinning C21S-C40S cotton yarn are low priced and replenish raw materials in time.

Three, is not conducive to the import of foreign cotton, especially low quality cotton clearance.

From the perspective of national cotton quality, it has little impact on Australian cotton imports in 2015/16, and has limited impact on the import of US cotton. It will not be "hurt". But it has a great impact on the Brazil cotton, West African cotton and India cotton entering the Chinese market. Moreover, in theory, once the import volume of foreign cotton in China has declined sharply, the decline of ICE will be a "resonance" with the reduction of the bid price of national cotton reserves.