Analysis Of Factors Affecting Cotton Market Last Week

ICE cotton weekly review (4.4-4.8)

Market Review

ICE

Futures: the most active May contract on Monday was slightly higher at 59.29 cents on the high side, falling 0.24 cents on the high side, and falling 0.06 cents and 0.15 cents on Tuesday and Wednesday, respectively, with a decrease of 0.06 cents and 58.54 cents, which is the lowest point of the week. This is the lowest point of the week. The higher the index is, the higher it is 0.28 cents; the company continues to go up and up 1.1 cents, the highest in the week to 60.58 cents, the highest point this week.

Zheng cotton futures: on Monday, due to the holiday of Ching Ming holidays, the main contract opened at 10255 yuan on Tuesday for 1609 months, up 75 yuan, and the lowest in the intraday price to 10250 yuan. This is the lowest point this week. On Wednesday, it opened up and went up to 115 yuan, the highest in the week to 10470 yuan. This is the highest point this week; Thursday fell back by 55 yuan; while the yen rose higher and went up by 20 yuan.

Two. Analysis of market influence factors

Fundamentals

The US side: February durable goods monthly rate correction value -3%, the expected and former value -2.8%; February factory order rate of -1.7%, expected -1.8%, the former value is 1.6%; in March, the Markit comprehensive purchasing managers index is 51.3, the former value is 51.1; last week, the number of unemployed 267 thousand people is expected, the expected value is 270 thousand, the former value is 276 thousand; in the speech, Yellen praised the US economy in good condition, refuting the argument that the US economic bubble is about to burst, she said that the US economy has a solid foundation, the US labor market is recovering, and pointed out that the nominal unemployment rate is only 5%.

歐元區方面：英國3月建筑業采購經理人指數54.2，預期54.1，前值54.2;歐元區4月Sentix投資者信心指數5.7，預期7，前值5.5;歐元區2月失業率10.3%，預期和前值一致;意大利、法國、德國、英國和歐元區3月綜合采購經理人指數分別為54.7、50、54、53.6和53.1，法國和英國數據表現較好;歐元區2月零售銷售月率0.2%，預期0%，前值0.4%;德國2月工業生產月率-0.5%，預期-1.8%，前值2.3%，年率1.3%，預期0.4%，前值2.2%;歐洲央行行長德拉吉表示，歐元區經濟正在溫和復蘇中，資產購買計劃對推動歐元區經濟增長有效，新的舉措需要一定的時間才能傳導到經濟中，而歐洲智庫警告稱，隨著歐元區債務的上升，以及意大利、葡萄牙、西班牙等國退出財政緊縮政策，歐元區未來有可能面臨新一輪危機。

China: fiscal March

The purchasing managers' index (PMI) of the industry and services was 49.7 and 52.2 respectively, higher than the 1.7 and 1 percentage points in February, which affected the total output index of Caixin from 49.4 in February to 51.3, the highest in 11 months, and the recent stronger than expected economic data lifted the market's confidence in China's economic growth momentum.

2, ICE cotton price first suppressed after Yang, showing a rebound trend.

ICE cotton futures fell slightly, followed by a small rebound, and finally closed up.

The main negative points were: the commodity market generally fell on Monday, driving cotton prices downward. And the data released by the US Commodity Futures Trading Commission on Friday showed that speculators increased their ICE cotton futures options to 41110 hands in the week before March 29th, the highest level since the beginning of 2006, indicating that the market is short of strength. Two, the United States Department of agriculture's China counselor said Friday that China's 2015/16 annual cotton inventory at the end of the year is expected to be 13 million 800 thousand packs, accounting for 61% of the global total, and the slowdown in economic growth as well as the large import of yarn will continue to block the rise in China's cotton usage. China's cotton imports in 2015/16 are expected to be 1 million 100 thousand tons, the lowest level in 13 years, and China's imports of US cotton will also be reduced. This week

China is about to release its own reserves to reduce inventories and meet market demand, which is unfavourable for international cotton prices. ICE cotton prices showed a weak fall in the first three trading days of the week.

Cotton prices rebounded on Thursday and Friday, mainly benefiting from the following support factors: first, the International Cotton Advisory Committee in the latest monthly report reduced the global cotton end of year inventory forecast in 2016/17 to 19 million 390 thousand tons, estimated at 19 million 500 thousand tons last month, estimated at 22 million 950 thousand tons, estimated 23 million 890 thousand tons of consumption, and estimated 7 million 490 thousand tons of import and export volume.

單從年末庫存來看，該報告有一定的利多，但從整體來看，消費量和和進出口都有下滑，顯示未來市場前景并沒有根本性的轉好，對價格的支撐也有限;二、美國棉花周度銷售量大增，美國農業部公布的周度銷售數據顯示，截止3月31日當周，美國2015/16年度棉花出口凈銷售210900包，較之前一周大幅增加，較此前四周均值增加45%，主要銷售往越南、中國大陸和土耳其，出口裝船331400包，創下市場年度高位，主要運往越南、土耳其和中國大陸，銷售數據的利好暫時挽回了棉價頹勢;三、交割庫存下降供應緊俏，截止4月7日，ICE可交割的2號期棉合約庫存為36316包，而上月底的庫存為45712包，持續減少，經過幾個月的消化，市場缺乏可供交割的當前作物年度高品質棉花，不僅在美國，在中國及全球多數國家也有類似的情況，這種情況也反映在價格上，ICE棉期貨近月5月合約較7月和

The December contract has been rising for more than a month, and this is a sign of short supply. Four. The Federal Reserve Chairman Yellen said that the US economy is still on the road of reasonable growth. It will continue to increase interest rates based on economic data in the future. It shows that it has confidence in the US economic prospects. This also gives the market optimism. On Friday, the US dollar went down, the three major indexes rose, the international oil prices rose, the commodity prices generally rose, and the prices of the commodities generally improved, which led to a larger increase in cotton prices, which eventually led to a rise this week, and the contract rose to 60 cents above May.

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Other aspects: the US Department of Agriculture announced in the weekly crop growth report that by the week of April 3rd, the cotton planting rate in the United States was 3%, 2% in the same period last year, and 5% in five years, and two of the 15 cotton producing states in the United States began to sow. Among them, Arizona was far ahead, with the planting rate of 25%, and the planting rate of Texas was 5%.

3, domestic demand for upstream and downstream markets warmed, cotton prices rebounded

Since the beginning of the month, Zheng cotton futures began to rebound continuously, although the increase was not large, but it was a rebound trend. Some changes in the upstream and downstream markets also made cotton fundamentals optimistic in the near future.

First of all, look at the downstream aspects. First, the textile market has been in the peak season. The production and marketing situation has been greatly improved. Orders for clothing, weaving and spinning enterprises have been improving continuously. Some old customers have returned orders. According to some enterprises, the production and sale situation of light spinning C21S, C32S, C40S and JC32-JC40S cotton textile products in Guangdong, Zhejiang and Shandong has gradually improved since the middle of 3 months. The order of some downstream weaving factories can be discharged into mid May, and the textile enterprises have started to turn better. Two, the cost of domestic raw materials has decreased, the competitiveness of domestic yarns has been enhanced, and the profits of enterprises have also changed.

The price of imported yarn has increased by 200-300 yuan / ton due to cost factors. The price advantage of imported cotton yarn from India, Pakistan, Vietnam and Indonesia has been narrowed continuously compared with that of domestic yarn, and the C32S price of individual large factories has been narrowed.

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After the customs clearance, the price is even higher than that made in China. The difference between the internal and external yarns is further narrowed, and the superiority of the domestic yarn rises.

The downstream situation has improved, and demand for cotton has also increased, supporting cotton prices to rise. In April, 8 Japanese Friday cotton price index 3128B cotton newspaper 11696 points, 17 points higher than last Friday, the spot index picked up, spot Xinjiang cotton quotation bottomed out, and the mainland cotton also stabilized.

Before the cotton textile enterprises have been using the purchasing method of buying and buying with the usual use of 5-10 days, they are waiting for the reserve cotton policy to publish. The current round out policy has not been released according to the expected time, and has to purchase cotton linen to meet the production demand, and the market has seen more and more inquiries and purchases. After several months of digestion, the market has made the domestic high-quality cotton scarce. Under the guidance of the policy of first out and first out of imported cotton, the import cotton stocks are also decreasing, and the price of imported cotton has obviously decreased.

With the reduction of resources and the increase in procurement stage, some cotton business enterprises have purchased 2129B2 grade lint in large quantities. The price of Xinjiang high quality lint has increased by 100-200 yuan / ton, and cotton middlemen without inventory have chosen to enter the market. The profits of traders are generally 50-100 yuan / ton.

With the stabilization of spot prices, the mindset of cotton enterprises has changed. The cost and price of lint cotton have been inverted 1200-1500 yuan / ton, and the pressure of short-term funds is not great. Cotton processing enterprises are reluctant to sell.

On the whole, the impetus of downstream demand improvement makes cotton price trend better.

-- technical side

This week, high and high, continue to rise, from the weekly point of view, this is a continuous rise of four weeks, but has not yet got rid of the empty pattern, prices continue to rebound trend, the trend is expected to continue to rise slightly.

This week, we opened up and walked high, recovering most of the previous week's decline, continuing to run sideways smoothly, and the market structure has not changed much. Currently, prices are relatively low. We expect that in the next week's low adjustment, the price center of gravity is expected to continue to move upward.

Three, future prospects and operational recommendations

The US economy has recovered steadily, the employment market has been improving as a whole, and the employment is approaching the maximum. Whether the interest rate increase in the late stage still has a great influence on the commodity market.

Although the eurozone has taken some measures to support the economy, its effectiveness remains to be seen. Its economy is still facing risks and worries the market.

China's economic slowdown, the recent data for the better, the next week will be released in the first quarter of China's GDP, which is one of the main concerns of the market.

Cotton's own fundamentals, and the support of the external market to support cotton prices rise and recover the decline, but cotton prices have been optimistic in recent days, but we can also see that cotton prices such as robust sales data and export shipment data support on Thursday did not increase significantly, indicating that the market still has some worries. The supply of cotton in the global market is seriously oversupplied. Investors are worried that demand will not continue to improve. China's cotton reserves will give priority to imported cotton, which makes the price of domestic cotton imports fall significantly. China's round of export will further reduce the price difference between inside and outside cotton, and will further reduce imports of cotton and cotton yarn and curb cotton demand in the international market. This is the fundamental pressure on cotton prices.

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The domestic market has some warmth, temporarily ignoring the adverse factors such as large inventory and the upcoming cotton throwing. The cotton price has stabilized and picked up because of the support of downstream demand, and the yarn products entered the peak season. Because of the cost of domestic raw materials and the rising price of imported yarn, the price of domestic yarn has an advantage. The increase in demand has led to the recovery of textile enterprises and the increase in demand for raw materials. The market waiting policy for cotton reserves has not been released on schedule. The supply of the market, especially the lack of high-grade cotton materials, has also improved the prices of medium and low-grade cotton, which has supported and stabilized cotton prices. It is expected that this rebound will continue in the coming week.

But in the recent optimistic market environment, we must remain sober. The market has not worried about the risk of cotton stocking. The pressure on cotton enterprises and cotton traders to go to stock is still large. Whether the cotton and cotton yarn market will continue to warm for a long time remains to be seen. The purchase of cotton mills and middlemen is still mainly based on phased demand, and there is no fundamental change in the fundamentals.

In the coming week, cotton prices will rebound at home and abroad, especially in the domestic market.