At noon on Friday, all cotton futures contracts closed at the daily limit, and the main contract CF201 hit the daily limit, with an increase of 8.01%, closing at 22,855 yuan/ton, and the price hit a 10-year high. Cotton yarn futures followed the upward trend, and the main contract once hit the daily limit.
The domestic new cotton purchase market is heating up again, and the price in some areas of northern Xinjiang has returned to 11 yuan /kg, bullish enthusiasm in the futures market was rekindled.
Thanks to technical buying and generally positive sentiment in the commodity market, ICE cotton futures closed more than 3% overnight, ending a four-day losing streak. The December cotton contract closed up 3.24 cents, or 3.12%, at a settlement price of 107.10 cents per pound.
China Cotton Reserve will organize the release of the first batch of cotton reserves to curb excessive price increases
According to the China Cotton Information Network, on October 14, some ginning mills in northern Xinjiang began to gradually increase their purchase prices. The purchase price of machine-picked cotton is generally 10.6-10.8 yuan/kg, and a few are between 11-11.3 yuan/kg. Yuan/kg.
High cotton prices have attracted the attention of relevant departments. According to the requirements of relevant national departments, in order to promote the smooth operation of the cotton market and meet the cotton needs of cotton spinning enterprises, China Cotton Reserve Management Co., Ltd. will organize the release of the first batch of central reserve cotton in 2021. The state has introduced a cotton reserve policy to ensure supply and stabilize the market. From October to November, the reserve cotton will continue to be released to increase market supply and directly reach cotton-using enterprises. From the cotton price formation mechanism, the price will be restrained from rising too quickly.
Minmetals Futures Cotton Monthly Report pointed out that cotton production in the new year will be slightly reduced compared with the previous year. TTEB predicts that the total cotton production in Xinjiang will decrease by about 5%-6%. Recently, seed cotton prices have shown signs of rebounding after a slight correction, and most purchase prices have rebounded to more than 11 yuan/kg, which may once again trigger a counterattack by bulls.
The main trading logic of the market is still the rush to harvest seed cotton, and the acquisition progress is still deadlocked. Cotton farmers are hoarding goods and reluctant to sell, hoping to raise prices; while the downstream sentiment is strong about price reduction, and there is a certain degree of concern for high-cost cotton. Resistance. Therefore, the next focus is whether cotton farmers’ willingness to sell will loosen first or whether the demand side will give in first.
As for the downstream finished yarn inventory, most of it is accumulated in the spinning mill. The raw material inventory of the spinning mill dropped to 39.2 days. However, due to the unwillingness to accept the excessively high cost of cotton raw materials from the upstream, the purchase The will is not strong. The newly released cotton reserves of the State Reserve are not very popular due to quality and spinnability reasons. However, when the main contradiction is concentrated in the upstream harvest, the month-on-month change in downstream demand does not seem to have a significant impact on the cotton market.
↑In Gulebag Township, Yuli County, a cotton picker picks new cotton in a cotton field (10 Photographed by drone on March 12). Photo by Xinhua News Agency reporter Zhao Ge
The absolute price of cotton is already relatively high and faces a greater risk of correction in the future
According to the October global production demand forecast released by the United States Department of Agriculture, U.S. cotton production and ending stocks in 2021/22 will decrease month-on-month. U.S. cotton production was reduced by 3% to 18 million bales due to lower yields in Texas. There was no change in domestic consumption and exports in the United States. The ending inventory was reduced by 500,000 bales to 3.2 million bales. The inventory-to-consumption ratio was 18%, higher than the 17% in the previous year. The average farm price of U.S. upland cotton in 2021/22 is 90 cents/pound, an increase of 6 cents from the previous month, and nearly 2% higher than the historical high of 88.3 cents/pound in 2011/12.
Fu Bo, senior researcher of agricultural products at Guotai Junan Futures, said that although the United States Department of Agriculture has lowered China’s cotton demand in 2021/22, the market believes that it will be affected by the first phase of the trade agreement and the decline in domestic production. , China will maintain good demand for U.S. cotton, and the continued rise in energy prices has triggered concerns about winter heating. Cotton demand is expected to benefit in stages.
Galaxy Futures analysis said that the situation of US cotton seedlings is good, and the output in the new year is guaranteed. The latest report shows that the contracted sales of upland cotton are acceptable, and the increase in purchases in the Chinese market will It is the driving force behind the strength of U.S. cotton in the future. The October USDA report slightly reduced US cotton production, basically in line with market expectations. Although the fundamentals of U.S. cotton are expected to be slightly stronger than before as Sino-U.S. relations ease, considering that the current price of U.S. cotton is already at a high level for the same period in history, the risk of a future correction is greater.
As for the future trend of cotton, Galaxy Futures believes that considering the supply and demand situation of cotton, the supply of new cotton flowers on the supply side is relatively sufficient, while the demand data on the demand side has deteriorated recently, and export orders have deteriorated due to the epidemic. The pre-peak season is not prosperous, the order decline caused by dual control, especially the recent frequent and vigorous control of high-priced cotton at the policy level, has put pressure on the market in the medium and long term. In addition, the absolute price of cotton is already high, and the safety margin is relatively low. In the future High-priced cotton also faces greater risk of correction. In the short term, due to the shutdown of ginners, the price of seed cotton has dropped significantly. In addition, the large amount of cotton reserves has been rotated out, which also has an impact on the market. Cotton has many variable factors in the short term. </p
