Zheng Mian Seizes The Opportunity Of Reverse Operation

Recently, Zheng cotton price continued to maintain the slow rising trend since the end of April. The main driving force is still to follow the general trend of commodities under the support of macro factors. Yesterday, the main contract price closed at 12945 yuan / ton. The author believes that in the context of the macro situation unchanged, there will be some beneficial factors in the short term, which will continue to promote cotton prices. However, cotton is still in the context of loose supply, continued to rise after the pressure can not be ignored. At the same time, if the price of cotton falls, the advantage of undervalue will play a supporting role again. Buy cotton and the trend of the negative, so there is still an opportunity to maintain the reverse trend.

High global inventory consumption ratio

The U.S. Department of agriculture's August supply and demand report is a bearish report. Its forecast for the global cotton market in 2020 / 2021 increased production and reduced consumption. Among them, global cotton production increased by 370000 tons to 25.59 million tons, while consumption decreased by 260 thousand tons to 24.64 million tons. The inventory consumption ratio of global cotton market was adjusted to 92.8%, with an increase of 2.88 percentage points compared with the previous month. The inventory consumption ratio is at a high level for many years, second only to 2019 / 2020 and 2014 / 2015. In the case of loose supply, cotton prices will be difficult to have a trend to rise.

In addition, under the influence of the epidemic situation, the impact of cotton consumption side is obvious. Although the overall recovery is in a weak state in the near future, due to the irreparability and non necessity of its consumption, its recovery is slower than that of other commodities, which is also the reason why the rebound of cotton price is relatively small. At present, the domestic export market has not yet recovered, and the conversion of some exports to domestic sales has intensified the industry competition and damaged profits. After entering August, the downstream production and sales fell slightly, maintaining the pace of de stocking in the short term. Cotton yarn is faced with the competition of imported yarn again, and the cotton mill is cautious in purchasing cotton, and the transaction of cotton spot price and basis point price is not smooth. Therefore, the weak industrial reality leads to the limited bearing capacity of the downstream to the rise of cotton price.

There are still multiple positive factors

In the near future, cotton prices are still likely to continue to rise, mainly due to four supporting factors: first, the macro liquidity easing is difficult to reverse, and in the case of low cotton valuation, it is still supported by buyers. Second, the downstream is about to usher in the traditional peak season, export orders have also recovered, once the volume of export orders, the pull on cotton prices will be more obvious. Third, China will usher in two important nodes. The first is that the futures 2009 contract is facing delisting. In terms of the outflow speed of warehouse receipts, the warehouse receipt problems worried by the market in the early stage have little pressure on the market. Even though some high content cotton will have an impact on the price, it will be more reflected in the game of delivery month. The second is that new cotton will soon be listed, and there are more production lines in Xinjiang this year, which have been approved There are nearly 50 complex lines, so the problem of preemption is inevitable. Fourth, there are still hidden weather worries. Cotton in the northern hemisphere is in the early stage of maturity and harvest, so we still need to pay attention to the impact of bad weather.

To sum up, in the near future may occur under the support of favorable factors, cotton prices will remain strong trend. However, in view of the current overall loose supply, it is difficult for the downstream to recover quickly, and the rising height may be limited. If the increase is too fast, it will be an opportunity for enterprises to use new cotton for reverse hedging. Similarly, in the turbulent period before the U.S. election and the risk that the outbreak of the epidemic in autumn and winter is still likely to be high, cotton prices may turn down due to negative driving. Once there is a rapid decline, it will also be the time for reverse buying under the background of undervalued value.