Good Digestion Excessive Cotton Zheng Callback Bottom

Since the beginning of the month, the price of zhengmian futures has continued to rise. On Tuesday, the CF2009 contract rushed to a high point of 12155 yuan / ton, and then began a slow callback. Faced with the callback, the market participants are more calm. The reason is either the change of market drivers or the performance of market expectations.

At first, the US cotton was continuously signed by China and rose strongly. Then, due to the weather concerns in Texas and the strong non farm data in the United States, the outer cotton continued to strengthen, and the news of locust disaster in India and Pakistan was again fueled by the rise in cotton prices. US cotton continued to grow strong to promote Zheng cotton, while boosting domestic spot trading enthusiasm. From a fundamental perspective, domestic cotton social inventories are high, and demand has declined year-on-year, leading to a further rise in inventory consumption to historical highs. Although the sales of some textile enterprises have been improved after the domestic epidemic has been relieved, there are still some enterprises lacking orders and difficult to sell the gauze. Therefore, under the fundamental bad situation, Zheng cotton continued to rebound, mostly for investors' overdraft of favorable factors. In addition, during the period of Zheng cotton's strengthening, some enterprises bought in a timely manner, registered part of the futures as futures warehouse receipts, and designed and sold the hedging scheme. Therefore, the callback has become a necessity for most of the industry.

Yesterday, the US Department of agriculture (USDA) monthly supply and demand data report released. The end of the year 2020/21 cotton inventory estimate was raised to 104 million 670 thousand bales, with an estimated 99 million 430 thousand packages in May. The end of the year 2019/20 cotton inventory estimate was adjusted to 100 million 560 thousand packages, with an estimated 97 million 160 thousand packages in May. The US Department of agriculture also estimated that the world's cotton consumption was 114 million 410 thousand packs, down from the 116 million 460 thousand package expected in May. The report is negative, and it will work immediately in the external market. The ICE7 cotton contract fell or 0.81% yesterday, closing at 60.02 cents / pound. The intraday trading range is 59.35-60.51 cents / pound, the former being the lowest level since June 1st. Zheng cotton, after digestion of the early good stimulus, undertook the weakening of the external market and the suppression of domestic demand, down to 11850 yuan / ton.

According to the survey, most of the market participants believe that Zheng cotton's pullback margin is limited, and the bottom support is moving upward. At present, it is only a return to the fundamentals. In the late stage, domestic and foreign economic recovery is an inevitable trend, and strong prices will also become the keynote. Therefore, the performance of the new market will be relatively calm during the bottoming process.