Cotton Prices Rose To "Net Red" After Market Quotation Cited Concern

Since mid May, cotton has gone through a wave of ups and down and become a "net red" variety of futures. Is this market a flash in the pan?

The attention is very high.

Market surge led to regulation

In May 16th, cotton futures broke into the market. After 16, 18 and 21 days of constant breakthroughs, the price of cotton futures hit a high point of 19250 yuan / ton and became a "net red" star in agricultural products.

In June 2nd, the central storage cotton and the national cotton trading market jointly issued the notice on the relevant issues of the reserve cotton rotation in 2017/2018 (hereinafter referred to as the "notice"), which stipulates that from June 4, 2018 until the end of the current year, the reserve cotton rotation business is restricted to the textile cotton enterprises to participate in the bid and stop the non textile cotton enterprises participating in the bid. The cotton reserve purchased by the textile and cotton enterprises is only limited to the self use of the enterprise.

The release of the "Ban Ban" and the subsequent issuance of targeted tax quotas and other news triggered a continuous drop in cotton prices.

Xiong Tao, an agricultural product researcher at the Bank of China International Futures Research Institute, told the Shanghai Financial Daily that the market situation of agricultural products is different from that of industrial products, and the short-term fluctuations will not be particularly large.

In February 2016, the US cotton main body appeared at a low of 55 cents / pound. At the end of August, the price range of operation was 55-75 cents. The price interval of 2016/17 was 65-85 cents, and the running interval of 2017/18 was 70-95 cents so far.

Zheng cotton main force bottomed out in March 2016, breaking the 10000 yuan mark, and the end of the year rose to near 15000 yuan / ton. In 2016/17, the core operation interval of zhengmian was 15000-17000 yuan / ton, and the 2017/18 cotton year has not yet ended and has reached the high point of 19000 yuan / ton.

"Every low point of cotton price has been uplifted, and at the same time, there has been a breakthrough in every high point. The cotton market has already started, but it has not been caused by the long fluctuation time and the small amplitude.

Concern. "

Xiong Tao pointed out.

Si Xiaoyu, a senior researcher of Meyer futures cotton spinning, pointed out that there are three core logics in Zheng cotton's rise: tight supply and demand, less pressure on national cotton stocks, closer to safety stock and import policy, and policy control is also aimed at these three points.

The China Cotton Association has previously proposed that there is no theory of safe stock. At the same time, it issued a document indicating that if there is no demand for 2017/18, there is no upper limit on the number of rounds. In terms of import policy, the cotton association will increase the sliding quota import quota, increase the supply expectation for the logic of the multi head import policy. After tight supply and demand, the supply and demand of 2018/19 can basically maintain balance in the absence of extreme weather conditions after the expansion and issuance of import quotas.

Rising can prevent risks

Cotton prices continue to rise, investors and speculators are eager to make a move. What are the advantages and disadvantages of the cotton market? How can investors operate?

Xiong Tao pointed out that cotton consumption and cotton prices showed a high negative correlation, 2014/15 global cotton inventory consumption ratio reached a peak of 99%, and then fell to 84% and 76% in the following year, and 73% in the first half of this year. According to the global cotton supply and demand balance sheet released by USDA (US Department of Agriculture) in June, the annual 2018/19 inventory consumption ratio of new cotton dropped to 67%.

In terms of market operation, Xiong Tao said 2018/19 Global

Inventory consumption ratio continued to decline, the fundamentals improved. If there is no significant macro negative, the probability of returning to the low point is smaller, suggesting buying and expecting a new high.

Domestically, the acquisition cost of domestic cotton in 2017/18 is 15000 yuan / ton, and sales amount is about 16000 yuan / ton. In 2018/19, under the background of fundamental improvement, the acquisition cost and price rise is a big probability event. CF1901 contract has a long line buying value at 16000 yuan / ton line.

Si Xiaoyu pointed out that the first round of bad policy and the supply and demand of slow cattle are temporarily tied, and whether the latter sides need to pay more attention to the overweight. In May, the cotton price was traditionally strong, and the price in 6 and July should be less than that in May.

If there is no special policy release, the focus of price should be lifted gradually, but the bad policy has not been completely released.