Is Cotton Profitable? Is Cotton Price Expected To Recover?

Recently, the trend of cotton price is hotly discussed. An industry insider said that cotton now has a clear signal of stabilization. Is the profit of cotton exhausted, and cotton price is expected to recover?

First, futures prices ended falling and gradually recovered. Since the second working day of the reserve cotton round, Zheng Mian Futures entered the downward channel. On March 22, Zheng Mian's CF1705 contract successfully broke the pressure level of 15000 yuan/ton, down about 1600 yuan/ton from the highest price on March 7. Zheng Mian has risen significantly in recent two days.

On March 23, the main CF1705 contract closed higher, opening at 15000 yuan/ton and closing at 15320 yuan/ton, 350 yuan/ton higher than the settlement price of the previous trading day, and the trading volume increased, bringing a warming signal to the market. ICE Cotton season It also ended the downward trend for two consecutive trading days. On March 22, the May contract of ICE cotton futures rose 0.5 cents/pound compared with the previous trading day, and closed at 77.34 cents/pound, the biggest one-day increase since this week.

Second, Reserve cotton The round ended the situation of both quantity and price falling. As of March 23, the turnover rate of reserve cotton was 71.85%, and the average transaction price was 14774 yuan/ton (27 yuan/ton higher than the previous day), converted into 3128 level 15987 yuan/ton (66 yuan/ton higher than the previous day). The turnover rate of reserve cotton this week remained between 70-80% (except that on March 22, the turnover rate was only 58.01%), and the average transaction price was between 14600-14800 yuan/ton, which was relatively stable. The industry believes that the turnover rate and average transaction price of reserve cotton are within a rational range, and this stable situation is conducive to guiding the overall cotton price.

Third, spot prices fluctuate little. As of March 24, the delivery price of Xinjiang "Shuang 29" and "Shuang 30" hand picked cotton (horse value B2) warehouse in the Yellow River basin was 16100-16250 yuan/ton (official, tax included), and the price was stable. The price of 3128 grade local cotton (horse value C2) is 15500-15600 yuan/ton, and 4128 grade local cotton (horse value C2) is 15100-15200 yuan/ton. The sales progress is stable, and there are few deals. In the actual transaction process, enterprises generally have 50-100 yuan/ton discount. Because the distribution of local cotton is scattered, most of them are delivered to the factory for sales.

From the above three aspects, there are obvious signs that cotton prices have stopped falling. cotton Once the decline stops, the bullish factors will gradually dominate. As the negative pressure on the market caused by the export of reserve cotton wheel is gradually digested, cotton prices may usher in a steady upward trend. There are obvious signs that cotton prices have stopped falling Is the profit margin exhausted?

Related links:

The analysis of the market peripheral environment indicates that the following aspects should be paid attention to:

First, according to Trump's new policy, the US fiscal policy will be relatively loose and the monetary policy will be slightly tightened. If relevant policies make progress, the probability of leverage increase of the US government, financial industry, enterprises and households will increase sharply, which may promote the growth of US GDP to 4%.

Second, different from the loose capital environment in 2016, in 2017, Chinese government authorities, financial regulators and commodity exchanges intended to control risks and deleverage, and their regulatory mechanisms will continue to be in a slow upgrading trend.

Third, this year's commodity market has turned from a general sharp rise in 2016 to a clear differentiation. The linkage between cotton futures and the oil market may be closer than a few years ago. Large energy markets, including new energy, shale oil and shale gas, have a strong inhibition on the upper track of the oil price range. The relationship between the United States and Russia has changed from "cold to warm, then cold", The increasing political differences between the major countries in the Middle East and the United States have put pressure on the upward movement of oil prices, which in turn has curbed the cotton futures market. In the previous year, cotton prices rose significantly with the help of commodity prices.

Fourth, according to the monitoring data of China National Business Information Center, in January and February 2017, the retail sales of clothing of 50 major retail enterprises in China fell by 1.6% year on year, and the retail sales of daily necessities fell by 1.9% year on year, but the decline was significantly narrowed compared with - 5.5% and - 5.8% in the same period last year. In February 2017, China's export of textile yarns, fabrics and products reached US $458.677 billion, down 24.6% year on year. Excluding some exchange rate factors (since 2016, the RMB has continued to depreciate against the US dollar, and the exchange rate between RMB and the US dollar in January and February 2016 was 6.54, and the exchange rate between RMB and the US dollar in January and February 2017 was 6.88, which led to a decline in the price of textile and clothing products denominated in US dollars, thus affecting the export volume denominated in US dollars), it can be seen that the export of textiles and clothing is still unsatisfactory. Although China's yarn and cloth markets are showing signs of recovery, compared with cotton raw materials, the downstream textile and clothing terminal markets are significantly less popular, and the overall warming of the cotton industry chain has not yet arrived.

The fifth is to trace the cotton market data. The spot price of domestic cotton near the 16000 yuan/ton level, Zheng Mian at 17000 yuan/ton, and ICE cotton at 80 cents/pound are in the high range since 2000 (excluding the international financial market in 2008). In the context of tighter investment and financing environment, increased costs and relatively slow warming of the terminal market, the inhibitory effect of high quality raw materials on the expansion of reproduction of enterprises in the middle and lower reaches of the industrial chain will become increasingly obvious. Reducing the inventory of raw materials and finished products, improving the turnover rate of funds, controlling risk exposure, and enhancing the operational efficiency of enterprises may become a compulsory "operation" for managers of physical enterprises.

For more information, please pay attention to the report of World Clothing, Shoes and Hats Network.