Cotton Market Will Be In A State Of Short-Term Fluctuation.

"Based on the current situation, cotton prices will not be large unilateral market this year, up and down will not exceed 10%. At the same time, most cotton mills have a balance of production and marketing, though they can not see the driving force of consumption. Cotton spot trading is slightly lower than normal level, futures positions are in a narrow range, the overall forecast is that cotton is short term in the interval fluctuation state, the biggest variable comes from the macro level, and the macro comes mainly from Sino US trade friction. If the Sino US trade friction is easing, the price of cotton flower 12000 - 13000 yuan / ton is not high at present. At the cotton and cotton yarn futures Summit Forum held in Zhengzhou recently, Wei Gangmin, chairman of Tongzhou cotton industry, said.

It is understood that the forum is jointly sponsored by Huawen futures and Henan Textile Industry Association. The participants discussed the new supply and demand rules for cotton in the new year, and how to participate in hedging of cotton textile industry chain. Based on the industrial chain, we discussed the opportunities and investment opportunities of cotton textile industry chain enterprises, and attracted about 120 people from cotton textile related enterprises and futures investors in the province to participate in the forum.

The official of Zheng Shang introduced the operation of cotton yarn futures. The official said that in the first half of this year, new rules for cotton yarn futures were introduced, and market makers were introduced. The market liquidity was greatly improved, which provided an opportunity for textile enterprises to use cotton and cotton yarn futures to carry out cross species hedging operations. At present, more than 130 cotton textile enterprises are involved in cotton yarn futures trading. Since the listing, the correlation between cotton yarn futures and cotton futures prices has reached 0.92, and the correlation between cotton yarn futures prices and spot prices has reached 0.84. The key time points of large fluctuations in many markets accurately reflect market changes, and the price discovery function is basically effective.

Feng Mengxiao, chief economist of China cotton storage information center, said in the keynote speech of "analysis of cotton supply and demand situation in the new year", at present, the cost of global manufacturing is increasing, the efficiency is reduced, and the market is expected to be pessimistic. The market plays a decisive role in the allocation of cotton resources. She said that in 2018, the year of market environment reversed, reshaping the pattern of global cotton supply and demand, and the risk of cotton prices has been released. The 2019 is the further extension and enhancement of the trend. "At present, the characteristics of stock competition are more obvious, and orders in spring and summer are not as good as expected. Supply of cotton cloth market is larger than demand, supply of cotton yarn market is very abundant, and supply of cotton market is abundant. Feng Mengxiao said, 2019 cotton enterprises competition intensifies, capital market turbulence is worth noting, the weak oscillation of cotton market may continue for a period of time, but purchasing and storage is conducive to ease the pressure of supply, the market gravity will move slightly upward. For cotton enterprises, strategic positioning is the key. High quality development must have practical measures. Digging new endogenous driving force is the foundation of standing firmly, and survival and development.

Li Jinliang, general manager of Huawei futures Zhengzhou business department, said in the keynote speech of "cotton cotton yarn futures hedging practice", hedging is the main means of enterprise operation risk management, and its core is the control of open position. The control of open positions is based on the demand of purchasing and sales (production), combined with the price trend and seasonal fluctuation rule of the commodities in operation, and in different price States, through the corresponding adjustment of the proportion of exposure, so as to obtain the established profits and avoid operational risks. He believes that hedging is a necessary means for business operation, but it has strict discipline and control principles. If we want to make good use of it, it is important to build R & D, trading and risk control teams.

"The common mistake of enterprises in hedging futures market is to go to speculation, which is mainly caused by deviating from the main varieties of transactions, excessive transactions, and spot spot disconnection. If there is no good R & D support and warranty experience, the effect of hedging will be greatly reduced, even leading to failure of hedging." Li Jinliang said.