Cotton Price Faces Choice When The State Controls The Rising Risk Of Bulk Commodities

Since April, the global economy has continued to recover, and the Federal Reserve continues to ease its rhetoric and downplay the risk of inflation, which has aroused doubts in the market. After the cotton price rose, it fell back. The market is at the crossroads of long and short divergence. What is the next step for the cotton market? This issue of the monthly report will be discussed.

Domestic and international cotton prices rose sharply and then fell back. At the beginning of April, Biden announced the infrastructure investment plan, and the Federal Reserve continued to relax the argument and downplay the inflation risk. The drought in Texas cotton region was superimposed, and the international cotton price continued to rise. On April 27, ice cotton price broke through 90 cents / pound again; After the end of April, the Federal Reserve admitted that the economic recovery momentum was increasing, and there was a "bubble" in some areas of the stock market, and international cotton prices began to fall.

As of May 14, 2021, the settlement price of the main contract of ice cotton futures was 82.43 cents / pound, up 4.48 cents / pound or 5.75% compared with the beginning of April. The average price of international cotton index (m), representing the average CIF price of imported cotton in China's main ports, was 91.51 cents / pound, 3.44 cents / pound or 3.91% higher than that of early April. The RMB import cost was 14847 yuan / ton, which was 558 yuan / ton or 3.91% higher than that in early April.

Domestic cotton prices rose after the oscillation downward. In April, the cotton storm in Xinjiang gradually subsided. After the release of the high growth economic data in the first quarter of China, market confidence was restored. The superposition of India epidemic situation led to the enhancement of Southeast Asia order backflow expectation, which promoted the domestic cotton price to rise. Zheng cotton rose to 16355 yuan / ton on May 12. As commodity prices continued to rise, the executive meeting of the State Council reminded the rising risk, and domestic cotton prices stopped rising and went down. As of May 14, 2021, the settlement price of zhengmian's main contract was 15675 yuan / ton, an increase of 970 yuan / ton or 6.6% compared with the beginning of April; The national cotton price B index (representing the price of 328 grade lint cotton in the mainland) was 15818 yuan / ton, up 660 yuan / ton or 4.35% from the beginning of April.

Cotton price rise to the downstream conduction is not smooth. According to the data of China Cotton network data center, since April 2021, the price of cotton raw materials has risen rapidly, the cotton yarn market is slightly inferior, and the downstream cotton cloth is cautious. Cotton price and cotton, cotton yarn price trend deviation. As of May 14, the national cotton price B index and the domestic 232 cotton yarn (cncotton nc32s) increased by 4.35% and 2.97% respectively compared with the beginning of April, while the price of 32 pure cotton twill fell by 0.33%.

The above phenomenon is mainly due to the macro environment at home and abroad, the Federal Reserve played down inflation concerns and transferred the risk to other countries. After the global economy was hit hard by the epidemic, the economy is recovering, and the recovery momentum of economic prosperity in developed countries is particularly obvious. In April, the purchasing managers' index (PMI) of manufacturing industry in the United States and the euro area rose to 60.6 and 62.9 respectively, reaching the highest level since the establishment of the index. Important U.S. officials acknowledged that the economic recovery momentum is growing, and there is a "bubble" risk in some areas of the stock market, but the continued insistence on weakening inflation concerns has been questioned by the market. At present, the global capital market and commodity prices are rising faster than the recovery rate of the real economy. Once inflation, monetary policy or other fields change beyond expectations, asset price bubbles will be punctured, causing damage to emerging economies.

In response to the risk of external shocks, the pace of tightening monetary policy is stable. In view of the over interpretation of China's monetary policy tightening in the domestic market, the Politburo meeting on April 30 pointed out that the current economic recovery is unbalanced and the foundation is not stable. In terms of monetary policy, we mainly focus on stability, and re mention "reasonable and sufficient liquidity", which is somewhat loose compared with the "reasonable and moderate" in last year's central economic work conference. On May 12, the executive meeting of the State Council proposed that "we should deal with the excessive rise of commodity prices and their associated effects. We will strengthen the coordination of monetary policy with other policies to maintain the smooth operation of the economy. Guide the market to return to rationality again.