Cotton Futures Market Is Encountering "Late Spring Cold".

Since mid February, the price of Zheng cotton has continued to fall, and is currently hovering near the 10000 yuan / tonne pass, with the lowest price in the 1609 main market to 9975 yuan / ton, closing at 9990 yuan / ton, the lowest since the listing.

Zheng cotton futures price fell below 10000 yuan, so that the quiet cotton market since 2016 has seen a wave.

The surface of the market is calm, but it is actually a dark current.

Since last November, rumors about the cotton market in the cotton market have started to boom.

The sharp fall in international cotton prices has led to the downward adjustment of domestic cotton prices, coupled with rumours of various dumping and production cuts in the market and strong market panic. Cotton textile enterprises are pondering whether the current cotton prices have bottomed out.

Then, Zheng cotton price broke 10000 yuan, but the market's reaction to the rumors of cotton reserves? Or opened the gap of cotton prices down? Reporters interviewed many people in the industry on the current cotton market situation and the views on cotton reserves.

Rumors of reserve cotton shrouded the market

After the Spring Festival, the news of the coming out of the cotton reserves is coming out in the market.

Although cotton prices have fallen by 10% in the past month, rumors still remain at the level of hearsay, and there is no substantive news.

The main reason for the fall in cotton futures prices is the rumours of cotton spinning.

"The market is worried about the increase in the national cotton reserves.

This year, we should vigorously promote the structural reform of the supply side of agricultural products, and speed up the inventory of oversized agricultural products. The cotton market parties have strong expectations for the national cotton reserves.

Zhang Wenmin, general manager of Wanda futures cotton industry division, told reporters that up to now, the state cotton stocks up to 11 million tons, enough to meet domestic cotton market demand for a year and a half.

Since November last year, rumors of cotton throwing and storage have been ongoing.

Judging from the current news from all sides, the market has basically reached a consensus on the prediction of the delivery time of cotton reserves, that is, the time may be more suitable in April, which will not affect the processing and sale of new cotton, nor will it cause pressure on the lint clearing.

According to people concerned, the export price of national cotton reserves may be calculated on the basis of the weighted average of China cotton price index and China's cotton import price index this year.

Wei Gangmin, chairman of Henan TongZhou Cotton Industry Co., Ltd. believes that the new round of cotton production will be combined with the circulation of foreign countries, that is to say, before cotton is priced and thrown away, it may be a circular storage.

Circular dumping is the weighted average of the foreign A index and the domestic spot index. Whether foreign cotton prices fall or domestic cotton prices fall, this price index will fall.

What will be the impact of the circular dumping policy on China's cotton industry? Wei Gangmin believes that if the cotton prices fall and foreign farmers are unwilling to grow cotton, the supply and demand of global cotton will be changed.

For example, the cost of raw materials for cotton production in Vietnam will be higher than that in China next year, so the competitiveness of China's textile enterprises will naturally come up, and the demand for cotton will increase greatly.

In addition, the United States Department of Agriculture recently released the next year's global cotton market forecast report also shows that the 2016/2017 global consumption growth is weak, low chemical fiber prices and China's national cotton store plan will bring continuous pressure on the international cotton prices.

The USDA report thinks that because China's cotton production and demand gap has increased, and the price of rumoured rounds will be reduced, the number of Chinese reserve cotton throwing and storing in 2016/2017 may increase.

Futures and spot cotton prices fell

At present, the cotton futures market is encountering "late spring cold", ICE

Continuous decline hit a new low.

Affected by the global stock market crash and the fall in commodity prices, the price of cotton spot market has dropped along with the news that the reserve cotton is out of stock.

Cotton enterprises are eager to sell new cotton, hoping to rush out of stock before coming out of the market.

At present,

Enterprises have basically started production, but in the early opening stage, the overall market has not yet started.

The intention of downstream customers to enter the market is not strong, and the participation of traders is lower than in previous years. At present, the market is in a stalemate and stagnation stage.

Insiders said that because of the market bearish atmosphere, cotton prices continued to decline, textile enterprises for raw material procurement mostly wait and see.

{page_break}

There are three main factors leading to the decline of Zheng cotton futures price. The main reason is that there are three main reasons: first, the current market is very concerned about how to store the national cotton store. Many cotton enterprises worry that the large number of low price stores will further reduce the cotton prices. This is also the main reason for the recent decline in domestic cotton prices; two, the domestic and international economic growth prospects are still not optimistic, the demand for downstream cotton products is sluggish, and the international cotton prices continue to decline to a greater impact on the domestic cotton market.

At present, there are great differences in the price trend of domestic cotton in the late stage.

Although some futures analysts are still looking at the price of cotton, but because domestic cotton prices have been in line with the cost of imported cotton, and domestic cotton planting area is expected to continue to decline, many cotton enterprises think cotton prices are close to the bottom.

Wei Gangmin, chairman of Henan TongZhou Cotton Industry Co., Ltd., said: "investors who may be concerned about the fluctuation of cotton prices have seen the current situation. At present, cotton prices have fallen below 10000 yuan / ton from 13000 yuan / ton in the beginning of the year, and the overall trend is still falling rapidly, and the fall process has not yet been completed."

He said that the sluggish economic recovery and the national reserve cotton throwing and storage still dominated cotton prices. Cotton prices remained unoptimistic before the implementation of the policy of dumping and storage. The real turning point would come from the implementation of the policy of dumping and storage.

Merchants futures researcher also said that the low price of the national reserve cotton will be a big probability event, and cotton prices still have room to fall.

Textile enterprises call for stable round out policy

The rumors of reserve cotton wheels are bubbling with excitement, and the heart of cotton textile enterprises is also wavering.

Cotton prices fall, spinning mills are in a wait-and-see state, enterprises to reduce the loss of cotton prices, intensify inventory and reduce spot purchase of cotton, it can be said that the market access to cotton, the more difficult to sell cotton, the embarrassing situation.

In the last round of the reserve cotton rotation, there are professionals to remind enterprises that due to the huge stock of cotton reserves and market demand, it is very likely that in the future countries will turn out cotton reserves in a timely manner. Downstream cotton enterprises should adapt to this situation as soon as possible, and make good use of the reserve cotton wheel to choose suitable resources for enterprises.

However, the uncertainty of the time of storing cotton wheels has always made the textile enterprises panic and never dare to let go of their hands and feet for production.

Cotton spinning enterprises in Changyi city of Shandong province mainly produce pure cotton yarns and blended yarns, and the yarn branches are mainly concentrated in the middle branch yarn section.

A few days ago, the Chinese Cotton Textile Industry Association learned that the market is still not optimistic about the market situation in 2016, and there are many doubts about the cotton market.

Local textile enterprises have urged that although the sale of cotton reserves is not a precondition to suppress the market, the state should "normalize" the rotation of cotton reserves and implement a stable cotton production policy to create an equal competition platform for domestic textile enterprises.

The head of a large cotton textile enterprise in Henan also said that the most concerned business at present is the cotton placement policy, including the time of putting in and putting the price into play, hoping that the state can make it clear as soon as possible so that enterprises can make purchasing strategies and reduce risks.

According to the analysis of the relevant personages, the national cotton store is out of stock, the state has thrown up early, and a large number of cotton will be on the market in a short time. The serious supply will exceed the demand, the price will certainly not be ideal, and there is still a suspicion of the market. If the reserve cotton is late, for example, it will be delayed until the second half of the year, then it will face the season of new cotton listing in 2016 in October, and it will create a new supply exceeding demand.

Therefore, under the current downturn of downstream consumption, how to work out an effective round out policy in the shortest time to help the healthy development of the cotton industry as well as to adjust the cotton structure, inventory and reduce the financial burden as soon as possible, which tests the wisdom of the decision-making of the government departments and the survival confidence of many domestic cotton textile enterprises.