“Let me tell you some good news, cotton yarn futures are about to be listed!” This news was revealed at the 2016 China Cotton Forum held on the 28th. At the meeting, the manager of Zhengzhou Commodity Exchange said: At present, the exchange has completed the work of soliciting opinions from relevant institutions and will strive to choose an opportunity to list in the first half of 2017 after consultation with the China National Textile and Apparel Industry Federation. Since this year, the entire cotton industry chain has undergone tremendous changes, and the owners of textile companies are also living a miserable life. Industry insiders have long said that the listing of cotton yarn futures can benefit textile companies in many aspects.
At present, competition between industries has entered a new stage of “supply chain competition” from competition among individual enterprises. A small breach of contract by an individual enterprise in the supply chain may cause chaos in information and delivery in the supply chain. In the past, most domestic textile companies mainly focused on small orders and bulk orders. With the emergence of cotton yarn futures, the production and planning, procurement and sales of textile companies will be restricted and regulated by various factors in the future. Traditional companies cannot arbitrarily In case of breach of contract, delivery cannot be delayed and inferior goods cannot be passed off as good ones. Although this change will bring pain to traditional enterprises, this change will bring new opportunities for enterprises to integrate into the “supply chain” of international buyers.
The listing of cotton yarn futures is undoubtedly good news for people in the industry. For example: while spinning companies buy cotton futures, they can sell cotton yarn futures to complete arbitrage operations, thereby locking in risks at both ends of their operations. At the same time, cotton yarn has established a correlation with cotton prices and PTA prices, increasing investment opportunities. In 2016, the cotton market experienced unexpected fluctuations. From the futures market to the spot market, it experienced huge fluctuations from low to high, which at the same time drove the rise of the entire commodity. However, most cotton people have not profited from it. Now, cotton yarn futures are about to be launched, which is bound to bring considerable changes and impacts to the industry chain. Next, the editor will analyze it from the two aspects of domestic yarn and imported yarn. The impact of the listing of cotton yarn futures on it.
Domestic yarn
First of all, we can see that there are many advantages to cotton yarn futures. For example, spinning companies can sell yarn through the futures market and buy and sell directly online. The operation is simple and convenient, which greatly expands the sales market of textile companies. Secondly, the price of cotton yarn in the futures market is more authoritative and accurate, and the future price trend of cotton yarn can also be found.
But everything has two sides, and the corresponding cotton yarn futures will also bring some problems to the domestic cotton textile industry. In the early days of cotton yarn futures listing, imported cotton yarn was not allowed to be delivered, but now delivery has not put forward specific and substantive requirements on how to distinguish imported cotton yarn from domestic cotton yarn. Since the futures market requires mass products as benchmark products, most of the C32S cotton yarn produced on the market can be used as delivery products, and the quality of imported yarn also meets standards.
Although the futures rules clearly stipulate that in the early stage of the listing of cotton yarn futures, imported cotton yarn is prohibited from participating in the delivery of cotton yarn futures. However, domestic yarn and imported yarn cannot be strictly distinguished in terms of quality standards. In addition, the price difference between domestic and foreign cotton yarn is 1,500-2,000 yuan/ton, which is profit-driven. , the imported yarn will change its appearance and enter the futures delivery market, and the price of cotton yarn in the market will be lowered, which will also lower the overall price level of the spot market.
Imported yarn
For traders of imported yarn, the listing of cotton yarn futures means: it becomes easy to close positions and profits can be locked in. Although the Zhengzhou Commercial Exchange stipulates that imported yarn cannot participate in delivery for the time being, the industry has never lacked the wisdom to skirt around the edges, and it is only temporarily not allowed. We assume that the imported yarn can be delivered smoothly, then the industry does not have to worry about the difficulties in closing positions and the breakage of the capital chain that have been frequently encountered before. For example, a trader has a batch of C32S woven yarn in stock. There is no need to be stuck like before because the market is light and struggling to find customers to take orders. As long as the price on the futures is acceptable, it is nothing more than a high or low price. The problem is not that the goods cannot be shipped.
If you have an advantage on the purchasing side, you can also sell on futures while purchasing to avoid the risk of possible price declines and lock in profits. In this way, the circulation cycle of funds is shortened, the use of leverage is increased, and traders have Opportunity to obtain stable income through good operation.
Afterword
In addition, the listing of cotton yarn futures brings many conveniences to domestic cotton companies, textile companies and cotton traders. Currently�The creation of these conveniences not only relies on the price discovery, hedging and arbitrage functions of futures, but also depends on the activity of the product. The more active the market transactions are, the easier it is to implement these functions. In addition, some people in the industry are optimistic that the launch of cotton yarn futures will be a “win-win” result for the entire cotton textile industry chain.
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