The Pressure Mountain Of Reserve Cotton Wheel Shocked Zheng Mian Into "Ten Consecutive Drops"

The futures market is really interesting. When everyone is unanimously bearish, the market rises sharply. When everyone is unanimously bullish, the market turns sharply downward. Just like Zheng Mian's recent performance, it was originally thought that the cotton price might be high or low at the beginning of dumping and storage, and the clinker would continue to decline soon after the madness of the previous two days. What's the logic behind this?

It is not difficult to find from Zheng Mian's k-line chart that, under the pressure of reserve cotton rotation, Zheng Mian began to decline from March 7. As of March 22, there had been ten consecutive declines. If there is no major change in the near future, it is expected that there is a great possibility of further decline. In terms of panel price, Zheng Mian's main contract CF1705 also fell from the highest of 16500 yuan/ton on March 7 to 14855 yuan/ton today, a full drop of more than 1600 yuan/ton, which is surprising.

At present, Zheng Mian's ten consecutive falls have not stopped, and the decline may continue. What is the short position logic? From a fundamental point of view, the market has sufficient spot supply. Both commercial and industrial cotton stocks can fully meet the needs of enterprise procurement, and the rotation of reserve cotton also puts pressure on the market bulls. Some textile enterprises said that the inventory of cotton raw materials could be maintained until April.

Yang Zhi, Deputy General Manager of China Cotton Futures Department, believes that, Massive warehouse receipt It is the main factor to suppress futures prices. The continuous growth of warehouse receipts has become an important weight to suppress futures prices. However, Yang Zhi believes that this situation will not last too long. With the continuous decline of futures prices, the attention of textile enterprises will increase.

On March 21-22, Zheng Mian's main CF1705 contract broke 15000 yuan/ton, which had a great impact on the confidence of bulls, cotton merchants and cotton enterprises. The spot market shows a polarization trend. On the one hand, the gross weight of high-quality and high-grade Xinjiang cotton (including hand picked and machine picked) is only reduced by 150-200 yuan/ton, which is generally reluctant to sell and resistant to decline. There is a strong expectation for the gap of high-quality cotton from April to September; While some large traders purchase high-quality, high spinnability lint storage from the spot market and the reserve cotton round auction market, waiting for the price in the future.

On the other hand, low quality and low spinnability New cotton Under the pressure of the listing and circulation of reserve cotton, the price of "Double 28" and "Double 29" hand picked cotton in Henan, Shandong, Jiangsu and other mainland warehouses is generally 16000-16200 yuan/ton and 16300-16500 yuan/ton (gross weight), but the price of 3127/2127 (breaking strength 27 and below) local cotton is only 14800-15200 yuan/ton, and the difference between the two is more than 1000 yuan/ton. 　

When the futures price drops to+premium, it is also lower than the deposit price, Textile enterprises Intermediaries and funds will come in flocks. After all, the price performance ratio of warehouse receipts is higher than that of reserve cotton and other spot resources. At that time, 200000 ton warehouse receipts will no longer be an insurmountable threshold for enterprises that are eager to purchase them.

Although Zheng Mian's hope for recovery is still there, pessimism is now dominant. The golden rule of buying up instead of buying down still plays an important role, and the market needs time to digest. Of course, "the benevolent see the benevolent, the wise see the wise", everyone's analysis point of view will be different, and the rotation of roles of both sides is also changing with market supply and demand, capital speculation and other factors. The author also believes that due to the good demand in the downstream market and strong support at the bottom of the price, the price will rise in the spring in the future.

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