Oversupply Of Cotton Storage Market, But Cotton Price Rise?

The spot market has been rising steadily in the futures market, but less than the futures, the 328 cotton index rose from the bottom of March to 13285 yuan / ton, up 13.76%.

In addition, the strong price of foreign cotton also strongly supports the high domestic cotton prices, and strengthens the internal and external cotton linkage.

Policy, supply and demand affect cotton price fluctuation, considering that the national cotton storage market is still oversupply.

Countries in recent years

A lot of control policies have been adopted, which have great influence on cotton prices. More importantly, they include temporary storage and purchase, target price subsidies, national cotton storage and export, import cotton quotas and so on.

Influence.

The direct subsidy policy is being promoted.

Returning to a reasonable range and linking up with international cotton prices.

From a fundamental point of view, the market supply and demand change is still a direct factor affecting cotton prices.

In the 16 year, the planting area of the supply side dropped, the output was about 4 million 700 thousand tons, the demand side dropped slightly, and the demand was about 6 million 750 thousand tons.

Estimated 16 year import

With a quantity of 90-100 million tons, the cotton demand gap is about 1 million tons.

If you consider the state

Close to 10 million tons of inventory, the market is still in the pattern of supply exceeding demand.

Judging the future cotton price trend: short term bullish, limited long-term space

At present, the slow storage of State Cotton stores has made the amount of cotton flowing into the market short in the short term, and the shortage of high-quality cotton resources in the market, especially the tight spot resources in Xinjiang. At the same time, the recent devaluation of the RMB has boosted the export orders of cotton textile enterprises. The market supply is still tight before the new cotton market in September.

Spot prices will continue to rise.

In the long run, the high inventory and direct subsidy policy will restrain cotton prices from going up sharply, and the long-term rise will be limited.

At the same time, the market will enter the traditional off-season after June. The price of national cotton and cotton should be referred to the average price of cotton at home and abroad. With the acceleration of the storage speed of the national cotton storage, the market demand will gradually stabilize.

To sum up, we expect cotton prices to fluctuate in the range of 1.2-1.4 million yuan / ton in 2016, and the probability of large upward fluctuation is not large.

Cotton enterprises will benefit from the short-term rise in cotton prices, with emphasis on Huafu color spinning and Baron East.

The influence mechanism of cotton price fluctuation on downstream cotton enterprises is analyzed.

Enterprise products generally adopt the cost plus pricing mode, the price basis is determined with market price, the general enterprises should keep 2-3 months' inventory, and the raw material price of raw materials is historical price, which leads to the lag of the cost changes in the price of raw materials. Therefore, in the early and late fall of cotton prices, the profit margins of enterprises expand, and the profit margins of enterprises are compressed in the late and early fall of cotton prices. The difference between inside and outside cotton prices is negatively related to the profits of cotton spinning enterprises; the shorter the industrial chain is, the more sensitive the fluctuation of cotton prices is.

At present, the difference between domestic and foreign cotton prices has gradually shrunk at a reasonable level. It is expected that domestic cotton enterprises will benefit from the early cotton price rise.

It focuses on Huafu color spinning and Bailong Orient, focusing on spinning links, short industrial chain and large performance elasticity.