Xiao Fengbo: Three Dimensional Angle Analysis Of Cotton In The Late Stage Of Cotton Production

In April 23rd, the relevant state departments announced the announcement of the national cotton rotation in 2019. In response to the heavy news, Zheng cotton futures did not respond very much. The main contract CF1909 did not fall below 15700 yuan / ton, and the subsequent decline narrowed gradually.

Although the news of the resumption of national cotton rotation is relatively sudden, it is also expected in the market.

From the daily listing quantity seems to be more profitable, but for the first time, the introduction of rotation is another bad thing. How to deduce the cotton market in the middle and late stages? The author tries to analyze the national cotton rotation from the three aspects of "time, quantity, price and", and deduce the trend of cotton in the later stage.

First of all, from a time perspective, the market is already digesting ahead.

Since the reform of the supply side of the state, cotton began to "go out of stock" in 2016, but it was announced at the end of last year, and the rotation was announced in the year, less than a month from the implementation date of the round. In fact, the market began to rumor as early as the beginning of March, which once caused market tension. However, because of the low cotton price, cotton futures only fell slightly.

Judging from the raw material inventory cycle of cotton spinning enterprises, large textile mills stocked stock for 2 months or so, and the safety stock is in 1 months or so. The small-scale cotton spinning enterprises are used for mining and inventory is very few. Considering that the recent demand for cotton yarn is weak and the purchasing interest of enterprises is not large, we can infer that in the middle of May, there will be a wave of purchase, and the pressure of the supply of national cotton on the market will be weakened.

Secondly, from the perspective of quantity, the supply pressure of national cotton stores is decreasing.

Over the past three years, every working day of not less than 30 thousand tons, to the current 10 thousand tons of the listing, the supply is less than 2/3, and according to the total 1 million tons, it is also reduced by more than 6 over the past few years, and the continuous reduction of national cotton stocks, indicating that the latter's ability to intervene in the economic cycle is decreasing.

Although China's annual cotton gap is more than 2 million 500 thousand tons, and after the Sino US trade friction, most people believe that the state still needs to retain a certain amount of reserve cotton, which is also a strategic need to stabilize cotton prices.

Third, from the price point of view, the entry of national cotton stores will lower the price, but not much.

The price of domestic cotton and the national cotton price weight accounted for 50%. Of course, the state storage cotton is 2012-2013 years of cotton, the actual paction price under the quality discount background is lower than the new cotton, now the market is lack of low price cotton, to counteract the impact of the US tariff.

This part of the low-priced cotton market, to a certain extent, "grabbed" the high quality cotton market, pulled down the average price of cotton, but according to China's cotton demand 8 million 800 thousand tons, 1 million tons of State Cotton accounted for 11.4%, the impact on the overall price is not great, far below the impact of the previous three years.

Moreover, judging from the trend of cotton prices in the past few years, after the official start of the national cotton rotation, the weight of the impact on prices has been declining. The growth and demand changes of new cotton are the main factors that determine the cotton trend.

Therefore, we believe that although the coming out of the market will have a certain impact on the market in the short term, the scope will be lower than in the past. Moreover, for the cotton spinning enterprises and investors who have always regretted not having "bottled up", the opportunity is greater than the risk. The continuous introduction of the policy will be more conducive to the consolidation of the bottom of the policy.