Last week (August 31-September 4), the continued rise in cotton prices failed to pass on to the downstream, the loss rate of spinning mills increased, production capacity was reduced, cotton demand decreased, and new cotton is approaching, Supply pressure increased, and Zheng cotton pulled back downwards after long profit-taking. Last week, polyester among cotton substitutes was 5,505 yuan/ton, a weekly increase of 83 yuan/ton; viscose was 8,650 yuan/ton, a weekly increase of 100 yuan/ton. The cotton CNCottonB index is 12,662 yuan/ton, a weekly increase of 98 yuan/ton. Compared with Zheng Cotton CF2009, the price premium is 382 yuan/ton, an increase of 178 yuan/ton.
Futures. Zheng Cotton’s main contract CF2101 closed at 12,870 yuan/ton last Friday (September 4), a weekly drop of 160 yuan/ton. The number of transactions increased by 179,268 lots, an increase of 15.8%. Positions increased by 7,045 lots, a slight increase; the top 20 positions held 258,456 long orders, a decrease of 5,152 lots; short orders held 373,069 lots, a weekly increase of 8,120 lots; the net short position was 114,613 lots, a weekly decrease of 2,968 lots. The market fell, and the net short position decreased slightly. There were 13,878 registered warehouse receipts, a weekly decrease of 786. There are 123 forecasts, a weekly decrease of 65, and the available resources are reduced. The global epidemic is still spreading in the United States, India and other countries. The United States’ suppression of China has escalated, worsening the international trade environment and undermining international trade rules. The global trade order and China’s economic recovery are facing more challenges. New cotton will be launched at the end of September, and prices will continue to face upward pressure. Seriously, the probability of a correction this week is high. New cotton acquisitions and Zheng cotton trends will affect each other. It is expected that the main CF2101 contract of Zheng cotton has a high probability of fluctuating in the range of 12,500-13,100 yuan/ton.
External market: U.S. cotton export data was poor, coupled with the sharp decline in U.S. stocks, the rise of U.S. cotton slowed down. ICE’s main December contract closed at 65.11 cents/pound last Friday, a weekly increase of 15 points. The market price has exceeded the level of 60 cents/pound in the same period last year and reached the high point of around 65 cents/pound in October and November last year. This is mainly due to China’s implementation of the first phase agreement, which is not an increase in consumption, but a change in inventory position. . The U.S. stock market continues to rise and is under pressure. The global trade environment has deteriorated. The epidemic is still severe in some overseas areas. The downgrading trend of textile and clothing consumption is obvious, and the proportion of cotton used has dropped. Until the epidemic and Sino-US relations improve, cotton consumption will remain low, and cotton prices are more likely to fluctuate in the low range.
Spot aspect. Zheng Cotton’s correction in the last two days last week triggered some transactions at point prices. At present, the Xinjiang cotton point price transaction points in the mainland are concentrated at CF2009 contract price 12250-12300 yuan/ton, CF2101 contract price 12850-12900 yuan/ton, traders generally raised the basis, the overall basis level increased, and the machine procurement basis The price of cotton is concentrated at 400-600 yuan/ton, and the price of hand-picked cotton is concentrated at 800-1,000 yuan/ton. Among the imported cottons, Brazilian cotton is more cost-effective than Xinjiang cotton of the same quality, and transactions are active. Low-priced Indian cotton and West African cotton are also traded in small quantities. High-priced Australian cotton and American cotton are rarely traded, but the price difference with Xinjiang cotton is narrowing. Low-priced US cotton resources are close to Xinjiang cotton, and transactions are active. Spinners still adopt the purchasing strategy of buying as they are used and bargaining at low prices.
Operation suggestions. The COVID-19 epidemic is not over yet, and cotton consumption has only maintained 60-70% of the pre-epidemic level, but the market price has returned to the pre-epidemic level of the same period last year. Sino-US relations are unlikely to improve in the short term and may still escalate. New cotton is about to be launched to increase supply, and hedging short orders will increase, which is negative for the market. Cotton yarn is still in deep losses, which continues to be difficult for the industry. In the case of insufficient demand and oversupply, only rising yarn prices or falling cotton prices can maintain the balance of the industrial chain. However, it is currently difficult for yarn to rise, and we need to beware of the risk of a correction in cotton prices. </p
