Game Between Expectation And Reality In Cotton Market

In the past year, there has been a short reason why I have goods and can cope with all kinds of bulls. Even if I have goods at present, it is still the main reason why I am short of money. Judging from the latest USDA monthly report, our balance sheet is not changing very much, but the price of futures and spot is rising steadily. Why?

From the current Zheng cotton warehouse list, warehouse receipts and effective forecasts have been the flowering of sesame seeds, near the January contract delivery, warehouse receipts plus effective forecast has exceeded 1 million 500 thousand tons above this level, we can say that the number of warehouse receipts has repeatedly hit new heights.

In fact, judging from the total supply of cotton, the supply of the global supply has basically been determined this year. The quantity of warehouse receipts is only a form of spot supply, with more warehouse receipts and less supply of cash, and accounts for the total. Market concerns have been transferred to the following contradictory nodes.

1, the decline of Zheng cotton's space has been closed up and blocked. At present, the stock has been sold for two consecutive weeks and 0 transactions. For many spot sellers, it can't be sold, but it can be delivered to the reserve. But at present, why not sell it? First, there are few sales left now, and no more goods can be sold. Secondly, the bullish anticipation results in the reluctant sale. Since there are many needs of futures, reserves, cotton producers and cotton enterprises, they are not worried about the goods being unable to sell. In the case of rising prices and little financial pressure, reluctant sale is an inevitable choice. Warehouse receipts producers are now mostly insured, and the new sellers are not enough to suppress prices. At least, the insurance companies are selling strategies at high prices. There will be pressure on prices, but it is difficult to form a driving force for the decline.

2, textile enterprises are in the middle level at present, and at present they are still in a state of profitability. They will not stop purchasing, and their demand will remain stable. In addition, they will soon welcome the traditional small peak season after the Spring Festival. From this perspective, the demand of textile enterprises will not be reduced in the short term, or even increase the inventory.

3, the cotton trade has entered a key node. In January 15th, the expectation is good. At the very least, the upgrading of Sino US trade war is expected to ease in the near future. If Sino US trade is eased, China will further support the international cotton price if it increases the purchase of US cotton.

4, the increase of imported cotton is also difficult to suppress the domestic cotton prices. The price of imported cotton is basically at a level with domestic prices. From the price point of view, the price advantage of imported cotton is not obvious. Even if imported cotton is imported into China, it is difficult to form pressure from the price. From the current situation of quotas, imported cotton is not the first choice for domestic enterprises.

Summary: the total supply or the rise of cotton prices has formed a certain resistance, but the short term does not constitute a downward momentum. The cotton textile industry's recuperation makes the industry once again have a steady and favorable situation. The high proportion of warehouse receipts has basically become a reality. Subsequent short selling does not constitute the main force in the market, and the rise is expected to counteract the real pressure. From a time perspective, the market is hard to fall before the end of the purchase and storage.