The Causes And Current Situation Of Cotton Rising This Year

According to the consumption data of cotton in China, consumption reached a peak value (10 million 900 thousand tons) as early as 09/10, and consumption declined in the following 5 years (related to industrial pfer to South Asia) and reached a trough (7 million 410 thousand tons) in 14/15. However, consumer demand began to pick up in the past two years.

In March this year, cotton in Zhengzhou finally reversed its previous 5 year bear market, and has shown a fluctuating pattern.

This year may be the beginning year of a rising cycle, and it will play a role of taking up and taking off.

In the second half of 2015, there were two reasons for accelerating the bottom up: 1, cotton producers continue to take direct subsidy policy (19 thousand and 100 yuan / ton), prompting domestic cotton prices to return to market pricing, and to integrate with the international market; 2, large national storage stocks (more than 10 million tons) need to be digested, and the future national cotton reserves will go out.

By 2016, the positive factors of the market were finally revealed: 1. In terms of output, China's planting area has been declining for 5 consecutive years, and it is expected to reduce production to 4 million 570 thousand tons.

2, inventory, huge inventory in the previous year, there is an inflection point, indicating the arrival of the inventory phase.

With the steady rise of domestic demand, the balance of supply and demand has finally tilted to the bull market.

3, the domestic dumping and storage period was initially slow because of the slow public inspection, and at the same time, no increase in import quotas was issued.

This resulted in active pactions and rising prices.

In short, China and the world are short of production and huge inventories are gradually being digested.

This is the internal motivation for the rise.

Global "off inventory" is also the driving theme of the market in the next 3-5 years.

On the supply side, the pressure of harvest season still exists.

From China's perspective:

At present, domestic cotton picking is almost finished, and there will be pressure in later sales.

In the early days, Xinjiang's cotton was limited due to its limited pport capacity, but by the end of December, the problem would be eased.

Recently, the registered warehouse receipt of Zhengjiao exchange has increased, with the latest data of 637 (about 25 thousand and 500 tons), and the effective forecast of warehouse receipts has increased to 1441 (about 57 thousand and 600 tons).

If the main contract 1701 rises to above 16000 yuan / ton, then the profit will increase compared with the purchase price (the cost is 14600-15100 yuan / ton), and the pressure will increase. If so, the pressure will be greatly increased in January next year.

In addition, 1% of the import quotas will be used up by the end of February next year. Because of the difference in prices between inside and outside cotton (high and low price, the difference is 2000 yuan / ton), this will cause import pressure during this period.

According to the USDA report, there is still a large number of stocks at the beginning of 2016/17 in China, reaching 12 million 680 thousand tons (inventory / consumption ratio of 166%).

From a global perspective:

According to the USDA report, the output of cotton in the global 2016/17 year is increasing, increasing 1 million 480 thousand tons to 22 million 510 thousand tons. If China's output data are removed, global supply will be slightly surplus.

In addition, the output of India and the United States increased.

With the promotion of harvesting, a large number of cotton listing will bring downward pressure.

In terms of demand, winter is the peak shopping season for textile industry.

In order to cope with the production orders of spring garments, downstream enterprises usually have replenishment and purchase demand in 11 and December.

Textile enterprises had replenish a large number of national cotton stores before September.

By the end of November, it was basically exhausted.

At present, the demand for replenishment of textile enterprises is urgent, and the increase in the number of inquiry and procurement enterprises in Xinjiang has boosted the confidence of the cotton mill.

In addition, from the acquisition cost of new cotton, it is generally around 15000 yuan / ton.

In this way, the market will have strong cost support before throwing it in March next year.

At the same time, the United States

The situation is better.

The latest figures show that the weekly export of US cotton has reached 2 million 320 thousand packs, an increase of 60% over the same period last year.

This may be related to the quota import in China at the end of the year, and the purchase will be significantly reduced after February next year.

India is affected by currency reform, and new flower listing is slower.

However, the pressure of new flower listing is relatively high, and cotton prices have come down.

Comprehensive supply and demand in two aspects, at present, Zheng cotton presents a value insured selling, under the support of purchasing costs and demand season, or high oscillation and strong trend.

As time goes on, by next March, the harvest pressure will gradually appear, and the market will have a deeper adjustment.

For more information, please pay attention to the world clothing shoes and hats net report.