US Cotton Rose 8% During National Day Holiday

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During the National Day holiday in China, the main contract period price of American cotton increased by nearly 8%, once close to 114 cents / pound, which was a fierce rising market rarely seen for many years. In addition, the current opening price of Xinjiang new seed cotton was higher and higher, and the purchase price of some production areas yesterday exceeded 11.5 yuan / kg, about 100% higher than the same period last year, This allows the majority of cotton market and futures investors are very concerned about the future trend of prices.

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The reasons for the sudden acceleration of American cotton quotation are as follows.

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1、 The US cotton market has reached the time period when the cotton import traders of various countries concentrate on the price, and the probability of price raising is large.

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2、 The recent signs of easing and improving Sino US relations are becoming more and more obvious. The market expects that China will increase the purchase volume of American cotton in the future, which will support the US cotton price to continue to rise in the future.

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3、 Xinjiang's new seed cotton market has appeared the phenomenon of "grabbing", and the astonishing increase of seed cotton's opening price will greatly increase the lint processing cost.

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In the context of cotton continued to strengthen, China reserve cotton Management Co., Ltd. has also made response measures.

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According to the latest announcement: the company will start to put the first batch of central reserve cotton in 2021 from October 8. In principle, about 15000 tons will be put into each legal working day during the delivery period, which will be adjusted dynamically according to the market situation and other conditions.

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There is no doubt that the measures to "stabilize prices" by releasing reserves will give the downstream market a little breath of breath, but in the view of many people in the industry, this can not solve the problem from the root.

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Judging from the current market development trend, the negative impact of the first batch of central reserve cotton will be discounted today. The key reason is that the "root" of domestic cotton price rise lies in the upstream market. Although increasing the supply of lint market can meet the needs of textile enterprises, it can not "cure" the "disease".

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At the same time, the major futures companies also gave a more optimistic judgment on the follow-up trend of cotton.

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CITIC futures mentioned that the strength of ice cotton and the rising cotton cost in Northern Xinjiang were the direct factors for the outbreak of this round of market. In addition, benefited from the power rationing and production restriction in September, the downstream textile mills started down and the raw cloth rose due to the decline in inventory, which also played a boosting effect on the market strength. Overall, cotton prices are expected to remain high in October.

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The wording mentioned that the current domestic and foreign cotton price valuation has been high. According to the negative correlation between cotton inventory and cotton price, the static calculation of 2021 / 22 cotton operation range is: US cotton 72-114 cents / pound, Zheng cotton 15000-21000 yuan / ton. And this round of cotton price rebound market is not caused by production reduction, the height is limited. In operation, multiple orders can still be held, but it is not recommended to continue to chase higher.