Cotton Prices Have Been Underestimated To Buy And Wait.

Has cotton price been underestimated after a continuous collapse? Is cotton worth being hunters under the background of soybean, corn and other agricultural products?

I believe that the current cotton price is underestimated, but there is no upward drive, and the timing of the bottom is still too early.

Cotton valuation is at a low level.

First of all, cotton price is underestimated from the cost point of view. The cotton sold in North Xinjiang is basically sold out, and sales progress is about 90%. In the southern Xinjiang cotton, it is also 16000 yuan / ton at the present stacking storage and interest discount. The current price of 13660 yuan / ton is lower than the cost of 2340 yuan / ton, and this discount level has reacted most of the bad.

Secondly, from the base point of view, Zheng cotton was also underestimated. The North China machine picked cotton (grade 328) and the September contract basis were about 1000 yuan / ton, historically high position, indicating that the disk price was underestimated.

Thirdly, from the point of view of import profit, the profit of sliding tax import is 15 yuan / ton at present. The price difference between basic and horizontal water is unreasonable for the net importing country of cotton. After the end of the dumping, only the export of its own output and quota can not stabilize the domestic gap. In the long run, it is necessary to maintain certain quota import profit to facilitate import trade.

Finally, from the valuation of the parity, as at May 28th, Zheng cotton had only 9.23 of the value of domestic commodities, the lowest level since 2008.

There is no doubt that the current cotton price is underestimated, but this only means that cotton has the margin of buying safety, which does not mean that it will rise after buying.

Weather is too much for cotton and consumption is bad.

Affected by continuous rainfall in North America, corn and soybean growth slowed significantly over the same period of history, causing worries about abandoning seed production. This month, US corn rose to 26% lows and soybeans rose to 12% lows.

However, cotton production is basically normal in the main producing area, cotton planting is orderly advancing, and cotton is not in support of cotton because of the lack of cotton in the weather.

According to USDA, as of May 28th, the US cotton planting progress was 57%, and the average value in the past five years was 58%.

In terms of consumption, domestic demand and export data in May were not released yet.

Compared with April, the order of spinning and weaving clothing was further depressed, and finished product inventory increased further, and the phenomenon of price reduction increased.

At the end of June, the US side will probably fall to the bottom of the US $300 billion tax on the rest of the commodity. At that time, the undervalued cotton price will probably have a final drop. It is very likely that the price of 13000 yuan / ton will be broken down in space.

To sum up, from the cost, base, import profit, commodity price ratio and other aspects, we consider that Zheng cotton valuation is at a historical low level and has a good safety margin. But at present, the marginal profit of downstream consumption is aggravated, and the 300 billion tax increase is in the air. The weather is absent from cotton and cotton is not rising. The buying time still needs to wait. After that, we can pay close attention to the 4 possible rising drivers, such as Sino US peace talks, weather disasters, the entry and consumption of national reserves, and the improvement of consumption.