Three Factors To Help Zheng Cotton Rise Zheng Cotton Can Break Through The 13000 Yuan / Ton Pass?

Since mid October, Zheng cotton CF2001 contract has entered the callback consolidation period after breaking up 12800 yuan / ton, and the daily volume and position increased significantly from the late September to early October. In October 14th, the turnover reached 1 million 358 thousand hands, which hit a new high in recent months, indicating that funds and speculative forces entered the market.

There are three reasons for Zheng cotton's rise. First, the Sino US trade consultation has reached a phased agreement. The industry is looking forward to the second phase negotiations which are expected to start at the end of the month. Two, with the acquisition of funds in place and the mid-term flower listing, the cotton mill's rush to buy will lead to higher seed cotton purchase price, the rising cost of lint cotton, and the promotion of cotton spot prices. Three, traders will enter the market to purchase warehouse receipts, and the downstream production and marketing situation of the cotton textile industry chain will pick up and support the cotton price stage. In addition, some institutions and investors believe that the cotton yield per unit in Northern Xinjiang may be lower than expected in the new year, which is also an important reason for the layout of CF2001 and CF2005.

From the feedback of Cotton Traders and processing enterprises, at present, the direction of enterprises is not strong. On the one hand, the purchase price of cotton seed within the territory has basically reached the upper limit of the cotton mill, and the space for inflation is narrow. It is expected that the first half of November is expected to turn downward, leaving a decompression opportunity for cotton enterprises. Two, as of the end of September 2019, the national cotton inventory grew by over 600 thousand tons over the same period in 2018, and the price advantage of the superimposed warehouse in the inland bank was obvious. According to the cotton Logistics Association of China Cotton Association, as of the end of September, the total stock of cotton turnover in China was about 1 million 713 thousand and 200 tons, a decrease of 295 thousand and 400 tons from the previous month, up 640 thousand and 400 tons compared with the same period last year. Of the 43 warehouses in Xinjiang, the turnover turnover of commodity cotton was 1 million 125 thousand and 500 tons, an increase of 284 thousand and 900 tons over 840 thousand and 600 tons a year earlier.

The author estimates that Zheng cotton will have another 12800 yuan / ton, 13000 yuan / ton key point power and momentum in the short term, but 13000 yuan / ton is likely to become the watershed between the two sides. Cotton enterprises should seize the opportunity to hedge risks.

The author believes that, first, the phased agreement between China and the US is expected to be signed, and the short-term good will continue to be released. Two, China has committed to import 400-500 billion US dollars, and the US agricultural products will stimulate ICE and Zheng cotton to enter the rising channel again. According to the calculation of import amount and the export capacity of the US, including cotton, soybeans, pork, corn and DDGS, etc., it is bound to purchase the list in China. Once the large-scale purchase of 2019/20 in China, the US cotton will significantly increase the pressure of global cotton supply, produce, sell or reverse, and stimulate ICE's "wind direction index" to rise. Three, with the advance of the US Federal Reserve's interest rate cut in October and the rise of GDP in the three quarter, China's central bank once again lowered its interest rate or even cut interest rates on the way, and the financial, stock, bond and commodity futures will rebound.