Recently, the price of cotton has fallen, and the quotations in the cotton market in various places are chaotic. The gap in cotton prices is obvious. The price gap of lint of the same quality is nearly 1,000 yuan, with quotations ranging from 15,400 yuan/ton to 16,600 yuan/ton. Industry insiders analyze that differences of thousands of yuan are rare, and this is not a small amount for textile companies.
Regarding the current market environment, bulls believe that textile companies have exhausted all the cotton reserves purchased in 2016, and that it will take time for Xinjiang cotton to reach the mainland due to transportation capacity, so they are bullish on cotton prices. In addition, as the Spring Festival is approaching, small and medium-sized enterprises often use their remaining funds and new loans at the beginning of the year to purchase cotton to prepare for the opening of the market in the New Year. This will also boost cotton demand and help cotton prices rise. Multiple factors such as the continuous decline in cotton production in the mainland and the rise and fall of futures are changing the direction of cotton prices in the cotton market all the time, making it impossible for the rise and fall curve to move forward smoothly.
However, bears believe that: Judging from the current inventory of domestic cotton resources, there is no situation of cotton supply exceeding demand. In addition, the global economic downturn has not significantly improved, and there has been no structural demand adjustment in cotton spinning and its consumer market. Therefore, cotton prices have risen sharply. There is no market dominance support to the upside. As the new year is approaching, most textile companies choose to take holidays in advance. In addition, the yarn market is weak and difficult to change, and product inventory pressure is too high. The cotton reserves in 2017 are just around the corner, and textile companies have stopped restocking in the near future.
Comprehensive analysis, any cotton market price trend depends on two points, cotton market supply and consumption conditions in the downstream consumer market. Judging from the current situation, cotton prices may rise and fall. However, I believe that neither the rise nor fall of cotton prices will have the same “roller coaster” and “autumn overnight” scene. As a battle-tested field, The elites in the cotton industry will naturally understand everything clearly, control the market, and make decisions freely.
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