Cotton Prices Continue To Rise, Focusing On Cotton Textile Manufacturing

July 4th

The main contract was closed in the 1701 session and closed at the closing price of 15425 yuan / ton, which has risen more than 20% since mid June.

Commodity prices once again become a hot topic of concern.

Since the last wave of price increases, we have been firmly optimistic about the opportunity to raise cotton prices this year.

Earnings, and the increase in the price of finished products and gross margins.

The price increase is mainly caused by the shortage of spot market, the reduction of State Reserve sales and the continuous rise of cotton prices.

After the cotton market entered the summer, the stock in the market could be reduced significantly.

At that time, the sale of state cotton and cotton became the main source of supply, except for the first Sunday, which sold 30 thousand tons. After that, the average volume was less than 30 thousand tons per Sunday, which was far apart from the expected 50 thousand tons. From the beginning of June, no more cotton was sold. Last week (June 27th -7 1), the average daily selling volume was only 21 thousand and 400 tons, and the supply contraction intensified the contradiction between supply and demand.

The rising price of cotton, especially cotton in India, has led to the international cotton price.

India's output declined due to weather. Under the condition of undiminished demand, India's spot Shankar-6 price increased by 26% as compared to the beginning of July, and domestic demand for imports increased sharply, thereby affecting the international cotton price.

The increase in cotton prices has narrowed the price gap at home and abroad, weakened the advantages of foreign cotton and increased the demand for cotton.

The requirements for small businesses, such as the deposit and the minimum number of auctions, restrict the threshold for small businesses. Meanwhile, allowing non production enterprises to purchase cotton unintentionally creates a certain arbitrage space, which amplifies the price increase.

The price of cotton increased greatly, and the supply and demand of the new cotton market will be obviously unbalanced after the end of August and the 10 months before the new cotton market. If there is no sign of adjustment in the current policy, the stocking mood or the cotton price will be further higher.

With the increase of the cost pressure, the price will go down with the continuous rising cotton price, and the industry income and gross profit level will usher in an overall improvement.

Taking into account the expected performance and inventory status, we strongly recommend high performance growth Huafu color spinning, Xinye textile, and Baron East, which has the advantage of inventory.

At the same time, we should focus on: Lu Tai A, Luen Fat shares, vuri shares and China Textile shares.

Risk warning: cotton prices fluctuate drastically and performance is lower than expected.