Auction Of State Cotton Stores Will Push Price Differentials Down

The 2015/2016 annual reserve cotton rotation started in May this year. The specific rotation time is the national statutory working day from May 3rd to August 31st this year. The total output is not more than 2 million tons, and the daily sales volume is not more than 30 thousand tons in principle, giving priority to arranging imported cotton wheels.

The policy of reserve cotton rotation continued the general idea of "four benefits" last year, according to the way of "asymmetric rotation, first round and backward entry, multiple rounds and fewer rounds".

The pricing mechanism is as follows: this week, the reserve price of cotton reserves is sold (the discount standard level 3128B) = the average price of the cotton spot price index in the domestic market last week. The arithmetic average value of 50%+ is 50%.

Beginning in mid April, domestic cotton futures prices rose rapidly at the time of national reserve auction postponed, industry replenishment, and funds. During the period, spot prices rose 600 yuan / ton, and futures prices rose 3000 yuan / ton.

Once converted from the previous premium of 11% to 11% of the premium.

Despite the decline in cotton production and imports and the delayed effect of the national cotton auction, cotton supply has improved, but domestic and foreign cotton stocks are still at historically high levels, and demand has not really changed.

Therefore, from a long period of view, the foundation of domestic futures rising water is not solid. In the later stage, with the increase of auctions, the supply of futures will increase.

1609 in April, Zheng cotton broke through the downward trend line and the low level lateral oscillation interval, launched a strong wave of market and established a long trend.

The average system will be arranged in a long way. It is expected that the price will rise in the medium and long term.

The short term price is rising rapidly, and the EMA is far away from each other.

After the rapid rise of cotton in April, the price of domestic cotton has been significantly higher than that of imported cotton. The domestic cotton price has been 11% higher than that of imported cotton.

Judging from the current price situation, the converted national reserve cotton auction sale base price should be lower than the current domestic cotton spot price, so it has better competitiveness.

According to Breck's prediction, domestic cotton production in 15/16 is 5 million 20 thousand tons, cotton consumption to 720 tons, cotton imports to 1 million 100 thousand tons, and national cotton reserve plan to store 2 million tons, if the turnover is above 1 million 200 thousand tons, then the market supply is still ample.

On the whole, in spite of the high global cotton stocks, the supply of the whole world is larger than demand. But with the decline of cotton production in recent years, the cotton inventory has entered a downward cycle. Cotton's fundamentals have begun to improve, and the international cotton price is expected to be strong. In the domestic market, the storage of the country's stocks is high, and the market supply will be increased by the beginning of May, so that the cotton price will be suppressed. However, with the continuous decline of cotton production in recent years and the decline in cotton and cotton yarn imports, the demand for downstream cotton will also show signs of warming, and the fundamentals of cotton will gradually improve.

Technically speaking, in the medium to long term, the price of cotton is changing from a downward trend to an upward trend. The average system is arranged in a long way, and the focus of the future price is expected to move upward.

But the short term price is rising rapidly, and the average is better.

Therefore, in a comprehensive view, short-term cotton prices will be reduced by the impact of dumping and storage, but in the medium to long term, cotton fundamentals will gradually improve and cotton prices are expected to oscillate.