Zhengmian Futures Limit Cotton Future Trend Divergence

In July 9th, without warning, zhengmian futures, a market vane, once again closed down, with a minimum price of 13230 yuan / ton. The spot market of newly upgraded cotton was stagnant, and the differences in the latter part of the market were further increased, and the market wait-and-see sentiment was strong.

First of all, the market participants are inconsistent. Bearish people believe that the recent downturn in the lower reaches, especially in the Sino US trade negotiations, is not clear. Cotton is easy to fall and difficult to rise. Bullish people believe that cotton is below the cost line in recent years, especially when the leaders of China and the United States meet with G20 to release their favorable results.

The second is divergence between futures and cash. In the near future, the futures oscillations went down and the spot rose slightly. Zheng cotton acted as a market vane. The price rose first and then fell, showing the uncertain psychology of the market toward the future market. Yesterday (8), Zheng cotton main CF1909 contract closed 13710 yuan / ton, down 65 yuan / ton. According to the feedback from the enterprises, the quotations for "double 29" and "double 28" machines for picking cotton were 15000-15100 yuan / ton and 14700-14800 yuan / ton respectively. In Hebei, Shandong and Jiangsu and Zhejiang provinces, the price of gross weight of "double 29" Xinjiang cotton picking cotton was 15600-15700 yuan / ton, up 200-300 yuan / ton left and right from the previous week.

It is the textile factory's different attitude towards raw material purchase. It is understood that under the influence of bullish psychology, many textile mills actively bid for cotton reserves, while some pessimistic enterprises suspend the purchase of cotton reserves and spot stocks. Since the beginning of this week, the turnover rate of reserve cotton has also decreased compared with last week.

Finally, cottonseed stagnation went down. Recently, the price of downstream oil slump dragged down cotton seeds, and the market expected that the supply of cottonseed would be loose or bearish next year. Cottonseed prices are stagnant and mostly fall. In July 9th, the mainstream price of cotton seeds in Shandong and Hebei was 1.07-1.10 yuan / Jin, down 0.03 yuan / Jin compared with the previous week.

To sum up, although the G20 heads of state meeting between China and the United States has released good results, due to the long-term nature and complexity of trade frictions between China and the United States, the future market prospects can not be blindly optimistic. In the absence of support for cotton prices in recent years, the market generally expects cotton prices to remain low oscillation trend.