Market Analysis: Focus On The Recovery Of The Domestic Cotton Market After The Festival Or Strengthen The Offensive

?

After the liberalization of epidemic prevention, the mentality of all links in the domestic cotton market has undergone positive changes. The downstream has moved from the beginning of December to remove finished products from the warehouse and replenish raw materials. Although the current seasonal interference from the Spring Festival, the process of benign transmission has not ended.

According to TTEB, the inventory of finished products of the textile factory has decreased from 38.8 days on December 2, 2022 to 33.8 days at present, the inventory of finished products of the textile factory has decreased from 34.2 days to 9 days at present, the inventory of raw materials of the textile factory has increased from 4 days to 13 days at present, and the inventory of raw materials of the textile factory has increased from 13.9 days to the target 19.4 days.

It can be seen that the inventory of finished products and raw materials in the link of the yarn mill has decreased significantly, and the cash flow of the yarn mill is abundant. The immediate spinning profit has increased from about 660 yuan/ton on December 2, 2022 to about 1100 yuan/ton at present. It is almost certain that the yarn mill will strengthen its raw material replenishment after the festival.

Before the release of epidemic prevention, the downstream plans to lie down in advance; After the liberalization of epidemic prevention, the actual situation is to shorten the Spring Festival holiday and speed up the production of orders. It is said that some mills and traders plan to increase the spinning profit by 500 yuan/ton after the festival, which will further increase the spinning profit. It is expected that the raw cotton will also increase.

Although the position continued to decrease in the past month, the absolute amount was still at a historical high. Financial funds generally long cotton based on undervalued and strong expectations. Buying back is the mainstream mentality, which makes it difficult for the cotton market to make a slight adjustment. Cotton prices continue to rebound, impacting hedging pressure, and also affecting hedging mentality. Those who have been hedged are slightly suffering, while those who have not yet been hedged are constantly raising their psychological expectations.

With the rise of domestic cotton prices, the basis and import losses have been repaired to a certain extent, but the repair has not yet been completed; The price ratio of cotton and other commodities is still low, and there is a strong interest in OTC funds to match cotton.

The new hedging pressure is above 15000 yuan/ton, and it is likely that there will be a second expansion after the festival. With the support of industrial profits, the liquidity of position increase may increase, or there may be a wave of acceleration.