2016 The Impact Of The Cotton Reserve Policy On The Post Production Potential Of Cotton

In April 15th, the national development and Reform Commission announced the announcement of the reserve cotton rotation.

The news has been fermented in the market for a long time, and the content of the announcement itself is

The price expectation should be almost digested. At present, for the market, the average turnover of cotton reserves after the start of May 3rd is even more noteworthy.

As for the contents of the announcement of the reserve cotton rotation, I have the following understanding:

1, it is clear that the turn out time for the 2015 year is May 3rd -8 31 (after a slight push), and it is clear that the coming year will be 3 to August (6 months).

The clear timing of the next round of the year means that the store has left less than half a year for new cotton.

The large-scale cotton market will be held in November, that is, only 4 months' time. Over half a year, new cotton will be sold fairly in the market with reserve cotton, which will speed up the sales progress of new cotton every year.

2, make clear that the number of daily listing of this round is not more than 30 thousand tons, and the total output does not exceed 2 million tons, and the daily output does not exceed 50 thousand tons per day (the turnover rate is more than 70% days over three days, and the number of listed companies can be expanded).

In 2015, the output of domestic cotton was 4 million 700 thousand tons, and the import volume was 1 million 100 thousand tons. The total supply of new products was 470+110=580 million tons, with an average monthly supply of 480 thousand tons.

According to the full caliber analysis of cotton sales progress, industrial inventory level change and import volume in 2015, it is estimated that from 2015 to April 2016, domestic cotton consumption will reach 600-650 million tons in 2015, that is, monthly consumption of 50-54 million tons, and the monthly gap will be 2-6 million tons, that is, the annual gap will be 24-72 million tons. Even considering the increase of cotton demand in 2015 years, the annual gap will be expanded to more than 1 million tons, and the difficulty is also very great.

Therefore, the turnover rate of 2 million tons in the 2015 plan is not expected to exceed 50%. If more than 50%, it indicates that domestic demand for cotton has increased considerably in the second half of the 2015 year.

3. When the annual sales are coming out, the selling base price will be linked to the domestic and foreign cotton prices, adjusted once a week, the number of daily rounds will not exceed 50 thousand tons, and the turnover rate will exceed three days a week, exceeding 70%, and the number of listed companies can be increased.

The pricing formula of the round bid is:

Round bid = (CC Index 3128B index + CNCotton B index) /2 * weight 50% +Cotlook A index (US $/ ton) x exchange rate * (1+ duty 1%) x (1+ value-added tax 13%) * weight 50%, among which, the port 1% tariff tariff is calculated as follows:

(Note: normally the CIF price is included in the port price of 200 yuan / ton, but the port price is not included in the calculation of the cotton wheel price. Therefore, the cost of imported cotton calculated according to the above table needs to be reduced by 200 yuan / ton in the end.

According to the daily turnover of 50 thousand tons, and the number of listed companies can be expanded according to the turnover rate, the price will follow the market, fully expressing the state's determination to inventory, and the price of the bid will be linked to the cotton price at home and abroad, and the domestic cotton price will not go out of the independent market from the international cotton price.

Why is the average daily turnover after the start of the launch more noteworthy?

In the future, the volume of pactions will contain at least two aspects of information: the price rationality and the size of demand.

If the turnover is very small, it shows that at least one aspect of the above two aspects is out of order, or the price is too high, the market does not accept it, or the demand is too bad.

If the volume is large, it will at least indicate that at least one of the following two aspects is established, that is, either the market thinks that the price of the turn out is very low, it is the price depression, or the demand for the second half of 2015 has experienced a sudden increase, and the gap between the new supply and the annual demand in 2015 has been widened.

How big is the volume and how big the volume is? The author thinks that the average daily turnover is less than 5000 tons on average, which can be considered as a small volume. Under such a turnover, the probability that the price will continue to remain weak is very large. The average daily turnover is higher than 10000 tons on average. It can be considered that the volume of turnover is large, although the price will not rise trend, but at least the probability of maintaining stability is large.

Why the average daily turnover of less than 5000 tons is defined as "small". The reason why the average daily turnover exceeds 10 thousand tons is defined as "big". The average daily turnover is 22 days, with an average of 22 working days per month, with a turnover of less than 5000 tons per day and a monthly turnover of about 100 thousand tons. 5 to August (4 months) also accumulated 400 thousand tons, 2015 tons a new supply of 5 million 800 thousand tons, plus a turnover of 400 thousand tons, and the expected consumption is less than that within the annual volume of the annual consumption volume estimated from September 2015 to April 2016.

Without obvious growth in consumption, the probability of strong price will be small.

Daily turnover of more than 10000 tons, monthly turnover is more than 220 thousand tons, 5 to August cumulative turnover may exceed 900 thousand tons, 2015 annual consumption may exceed 580+90=670 million tons, exceeding the 2015 year consumption volume of 600-650 million tons according to September 2015 to April 2016 relevant data, indicating that the second half of the year 2015 consumption growth suddenly.

The larger volume reflects the growth of consumption, and the larger volume also reflects the recognition of the paction price. Then the price matching price is a relatively reasonable price.

The volume of turnover reflects the market situation (price recognition and consumption size). We should pay attention to the market information of volume integration.

Let's talk about the views of cotton after the announcement of the policy.

After the policy is clear, the view on post potential is below 10000 yuan / ton not short, and more than the accounting formula shows.

Why do we fall below 10000 yuan / ton and do not sell short? This topic and the current discussion are not a topic of discussion (I explained the logic of analysis in detail in the subsequent report). The simple logic is to put the cost of Chinese cotton under 10000 yuan / ton below the global competitive pattern of cotton cost, and compare the specific price intermediation in China below 10000 yuan / ton to show the competitive advantage. As long as the competitive advantage is achieved, China's cotton demand is stimulated. This specific price range is downward distortion. It is a distorted price. The risk of return at a distorted price is unreasonable.

Why do we not make more rounds than the accounting formula?

In May 3rd, the cotton reserves started to go out, and the output of 2 million tons was 500 thousand yuan / month, which was basically flat with the monthly consumption. According to the volume of output coming from 5 to August, the spot price during the turn out period was basically stable around the round of the bid price. Over the turn of the bid, too many risks continued to be more risky, because the above shorts were in the same position as the largest empty country in the country (2 million).

As of April 15, 2016, domestic sales of 3 million 490 thousand tons of lint were sold at a rate of 349/470=74%, of which 1 million 100 thousand tons of lint were sold in the mainland (close to 100%), Xinjiang sold 2 million 390 thousand tons of lint (sales rate of =239/360=66%), sales rates of Xinjiang local and regiments were different, Xinjiang's local sales rate was higher than Xinjiang corps, and Xinjiang Corps sales rate was just over half.

More than 30% of Xinjiang's cotton remains to be sold (the proportion of unsold sales of Xinjiang Corps is even higher), and the futures price is higher than the price of the wheels. It is equal to providing spot sales channels or selling value hedging prices for Xinjiang's unsold cotton, and the possibility of forming cotton warehouse receipts through Xinjiang pit warehouse in Xinjiang cotton will increase. This will form a spot pressure on the Zheng cotton CF1609 contract.

The basic fact of the domestic supply and demand pattern in 2015 is serious surplus. The basic fact in 2016 is that the supply and demand pattern is improved but the substance is still surplus (from the perspective of huge inventory and inventory consumption ratio). With clear timing and round out plan, the state has a clear attitude towards inventory, and the fundamentals obviously do not have the conditions for the trend to rise. The rise of the band can be understood, but over a certain limit is a distortion of the price. "Reason may be late but not absent".

Under the premise that the fundamentals do not have the trend of rising, we should create a stage price increase with capital, and the risk income will not be proportionate.

Sum up why the price exceeds the price of the national round, not too much: over the price, the short drawn the largest market in the country, the strength is very strong; to create sales channels for the unsold cotton in Xinjiang, to stimulate Xinjiang's unsold cotton to form cotton warehouse receipts through the Xinjiang pit stock, and to increase the pressure of the real market; the fundamentals do not match the trend of the rise, and the risk of capital investment is related to the market.

Therefore, for a long time, domestic cotton prices are oscillating in a large range. The bottom is concerned about the advantages of China's textile industry in the global competitiveness pattern. The upper limit should not exceed the price of the national wheels.

Based on the above analysis and judgement, the strategy is: no more than 10000 yuan / ton, no more than the accounting formula.