Cotton Production In China Is At A Historic Low In 2016/2017.

In the first half of the year, the price of cotton in China was low, and the internal and external spreads were basically flat. In addition, imported cotton was subject to policy control and China's cotton import volume had shrunk dramatically.

According to the statistics of China's General Administration of customs, the import volume of cotton in September was 60 thousand and 400 tons, a decrease of 8 thousand and 900 tons, which is far lower than the average value of 178 thousand tons in the past 5 years.

At the same time, the reserve cotton wheel has greatly reduced the cost of cotton production for textile enterprises. The price of Chinese 32S yarn and imported cotton yarn port is basically flat, and the price of India yarn 32S port, which used to occupy China's cotton yarn market with cheap price advantage, has been higher than the domestic cotton yarn price.

Data show that in September, China

The import volume is about 154 thousand tons, a decrease of 29.32% compared with the same period last year, and a decrease of 9.65%.

In short, the shrinkage of imported cotton and imported cotton yarn will be replaced by domestic cotton and domestic cotton yarn, which will replace the stimulation of domestic cotton consumption, thus reducing domestic stocks and supporting domestic cotton prices.

Affected by the weather, the new cotton opening scale time in Xinjiang area has been delayed 2 to 3 weeks compared with the same period last year. At the same time, the cotton spinning work has ended. In the short term, the cotton seed resources are tight and the new cotton price has been pushed up. Zheng cotton has also maintained a strong trend. In October, the 10 date price rose to 15745 yuan / ton.

However, as new cotton is on the market, and the new round of cotton storage will be launched in March 2017, the pressure of new cotton sales will increase. In October 20th, the 1701 cotton contract of zhengmian fell below the support level of 14800 yuan / ton to open the downstream channel.

USDA October supply and demand report predicts global 2016/2017

The increase in output is less than the increase in consumption, coupled with the increase in trade volume, which has reduced global end stock to 19 million 18 thousand tons, a decrease of 536 thousand tons compared with the end of the year.

In this report, the largest change in the forecast data compared with September is the United States. In the year of 2016/2017, US cotton output decreased slightly and consumption was flat, while the high cotton price in India increased the export volume of the US cotton trade, ending the stock volume down to 936 thousand tons, and reducing the 131 thousand tons per annulus, which made the US cotton price more than 70 cents / pound pressure level.

At present, US cotton is in the harvest stage, and the weather conditions in Texas, the largest main producing area, are very conducive to harvesting.

From the weekly growth report of the US Department of agriculture, we can see that the excellent cotton rate and the new cotton rate are higher than that of the same period last year, which made the high yield of American cotton basically a foregone conclusion.

At the same time, the US cotton end inventory forecast is still at a historical high level. The latter should not be overly optimistic. The price will remain oscillating at 65 to 75 cents / lb.

Zheng cotton's wave is the end of the use of cotton reserves, and the time difference between new cotton and the new cotton market is not large enough to promote the profit of futures market. In addition, the overcapacity in Xinjiang has aggravated the phenomenon of rush buying seed cotton, and seed cotton prices have been rising all the way.

According to statistics, the highest price of seed cotton is now equivalent to 16500 yuan / ton of lint cotton.

On the one hand, the price of cotton futures has always been on the spot price, so that there is no real pressure on the futures market. The price of the futures market has been continuously exploring 16000 yuan / ton, but over time, the quantity of new cotton is increasing daily.

On the other hand, in March 2017, a new round of cotton storage will be launched, leaving it for 2016/2017.

Sales are less than 5 months, and the contradiction between supply and demand is changed from oversupply to oversupply.

Therefore, there is no longer any reason to support capital speculation.

In addition, in October 12th, Xinjiang Corps again released 2016/2017 new cotton sales guidance price of 14800 - 15000 yuan / ton.

This news caused the cotton futures price dive.

This is the second time that the Xinjiang Corps has issued a sales guidance price since the beginning of the new cotton scale, and the sales price has been reduced by 200 to 500 yuan / ton compared with the first guidance price, which is quite different from the performance of Xinjiang Corps in previous years.

The author believes that the guidance price announced by Xinjiang Corps is far below the current seed cotton price, and also specifies the target price of cotton for the new year.

From a technical point of view, Zheng cotton 1701 contract fell below 14800 yuan / ton supporting position, is still in the downstream channel, and later there is a possibility of further decline, but the increase in domestic cotton consumption to support the formation of cotton prices.

Therefore, short term cotton prices should not be overlooked in the short term. The underlying support level is between 14000 yuan and 14200 yuan per ton, focusing on spot prices and sales and profits of textile enterprises.