Zheng Cotton Prices Tend To Increase, Hedging Space Opens

After the National Day holiday, Zheng cotton futures opened up and continued to increase in two consecutive trading days, up to 12345 yuan / ton. Then the market was suppressed under a large number of industries, but the price dropped slightly. As of October 9th, the price of the main contract closed at 12270 yuan / ton, up 255 yuan / ton compared with the closing price of 12015 yuan / ton before the national day. At present, the processing capacity of cotton in Xinjiang is gradually increasing. According to the current purchasing price of processing plant, the cost of lint cotton is found. So, under such a market, how should futures futures be interpreted?

Rising cotton prices during the holiday season have led to the rise of seed cotton purchase price and the promotion of Zheng cotton.

ICE's main contract closed at 60.72 cents / pound in September 30th, and it rose to 61.22 cents / pound by October 7th. During the national day, the US cotton rose 0.5 cents / pound. The head of the cotton ginning factory also indicated that the price of cotton seed purchased during the National Day began to rise after 5 days, especially in the north of Xinjiang because of the rising price of the US cotton and the opening of the domestic market. According to the statistics from the information network, the average purchasing price of machine picked cotton in the first few days before National Day is between 4.61-4.63 yuan / kg, and has risen to 4.73 yuan / kg in October 7th, and the increase is about 0.1 yuan / kg. The price of hand picked cotton is relatively small because of its high price. In October 7th, the average purchase price in Xinjiang was 5.61 yuan / kg.

The processing capacity of the whole territory is nearly 230 thousand tons, and the profit is relatively objective.

According to China cotton information network Xinjiang cotton processing statistics, by the end of October 8th, Xinjiang has processed 233 thousand and 100 tons of lint, and the average purchase price in Xinjiang is around 5.2 yuan / kg. For example, according to the current seed cotton purchase price, the cottonseed price (the latest transaction price is 1.72 yuan / kg), the processing cost of 1000 yuan / ton calculates the cost of lint cotton is roughly 11500 yuan / ton. At present, the futures price is 12300 yuan / ton, that is, if we do not calculate other expenses and increase the premium, the ginning factory can have a profit of 800 yuan / ton. It is understood that the quality of the processed cotton has a 300-500 yuan / ton discount, and the gross margin is calculated at 300 yuan / ton, while the trader CF2001 contract is based on -250 yuan / ton, which is directly sold at the spot price of the futures market and the final price is 12650-12850 yuan / ton. And in the process of investigation, most of the heads of enterprises are selling at a price basis.

The post market will form a short-term high point, but the possibility of a sharp rise is less likely.

Although futures prices will be suppressed by industrial hedging, the actual purchase volume and the proportion of processing capacity in the whole year are smaller. Later, if futures prices soared again, seed cotton purchase price and lint costs will continue to rise, boosting futures prices to go up again. The superposition of this year's domestic output will be affected by the low temperature during the planting period. If the total output is lower, the short-term cotton price will probably rise again. But in the end, it is still affected by the weakening of downstream consumption and the environment of Sino US trade war, and prices once again return to the situation of weak shocks.