Supply Factors Put Pressure On Zheng Cotton Or Test Million Yuan Gateway Support

Since May, the price of cotton has decreased rapidly, and the zhengmian 1909 contract has reached a new low of 12775 yuan / ton in June 6th, and the United States cotton also hovered below 70 cents / pound.

Analysts said that the weakness of the external market dragged down the pressure release from the supply side, and the export of textile and clothing was expected to be limited.

Price breaks even support.

"In 2019, the yield of us long and short end treasury bonds was upside down. The complexity of the international trade situation had a great impact on the global economic outlook, leading to the rapid decline in the price of zhengmian since mid May."

CITIC futures agricultural research fellow said.

MEIKO futures analyst Liu Yi and Li Peilin believe that the recent price of Cheng cotton has broken even, mainly due to the external market and bad atmosphere.

In the next year, the basic expectation of US cotton is empty. Under the double growth of production and marketing, consumption and exports are insufficient and stocks continue to accumulate. Exports are uncertain factors that will change the balance sheet in the future.

In the medium term, waterlogging in the southwestern part of the United States provides some support for the price, and it pays attention to planting progress and growth rate.

The analysts further indicated that the price of Zheng cotton continued to decline under the external market.

Cotton spot business inventories continue to remain high, combined with the May cotton auction, the supply side pressure continues to release on the disk, the spot end pressure will not quickly disappear, the price is expected to continue to be weak.

In addition, the downstream textile and garment exports have greater uncertainty.

Data show that clothing and accessories export 96 trillion and 700 billion yuan in April, 1-4 months cumulative exports of 391 trillion yuan, representing a year-on-year reduction of 7.6%.

After entering 2019, except for the strong export data in January, the volume of exports increased gradually in the next 3 months, but at a relatively low level, especially in April, the lowest export volume in the past 5 years.

Short term or further decline

In 2008, commodity prices plummeted, and the price of Zheng cotton was at the threshold of 10000 yuan.

Standing at the present point of view, can Zheng cotton fall to ten thousand yuan?

In this regard, CITIC futures agricultural research fellow said that, first, from the cost point of view, the spot purchase price of cotton has strong restraining effect on the price of cotton in the year.

To estimate the discount rate of Zheng cotton relative to spot cost by 15%, the bottom area of Zheng cotton or 12500-13000 yuan / ton.

Second, from the perspective of supply and demand, USDA continued to sharply reduce global cotton consumption in the context of the economic crisis in 2008, resulting in a continuous rise in the ratio of cotton to warehouse.

If the international trade situation can not return to normal, it is expected that the global cotton consumption in 2019/20 will continue to decline, which will lead to a higher ratio of bank to consumer.

Third, the reasons for the current cotton packing are insufficient.

Cotton has been sold out in cotton growers since 2018/19, and the loss has not been covered by the hedging traders.

In recent years, the core of China's cotton regulation policy is to ensure that domestic and foreign cotton prices remain reasonable. Under the background of the sharp fall in international cotton prices, China's reason for launching the cotton rotation policy is not enough.

Fourthly, the survey shows that since April 2019, the order situation of domestic cotton downstream gauze has gradually deteriorated.

In June, with the gradual warming of the weather and the gradual start of summer wheat harvest work, the downstream gauze enterprises stopped production less than the same period in previous years, that is, the deterioration of the international trade situation, and the pessimistic expectation of textile and clothing exports is gradually changing into reality.

The researchers said that taking into account the role of cotton spot cost in futures prices in 2018/2019, it is estimated that the main price of zhengmian is at 12500-13000 yuan / ton; if the number of Chinese textile and garment products exported to the United States is blocked, the purchase price of cotton will be lower in 2019/20, and the price of Zheng cotton is expected to be close to the 10000 yuan mark.

However, after entering 7-8 months, it is expected that the cotton prices will be higher or higher with the continuous reduction of warehouse cotton and the influence of weather during the cotton maturity.