Affected by the rapid spread of the “Delta” mutant strain around the world, which triggered concerns about economic recovery, U.S. bonds soared last night and U.S. stocks plummeted. Industrial metals, crude oil and other major assets collectively fell. Zheng Cotton’s main contract tested 17,000. After the yuan/ton resistance level failed, it plunged sharply and fell below the 16,500 yuan/ton mark (the intraday low of 16,380 yuan/ton on July 20). Panic among cotton companies and speculators increased.
Industry analysis shows that the fundamentals of cotton at home and abroad have not changed at present, and the pressure comes from external news, financial and commodity futures markets, so it is difficult to judge the short-term domestic cotton futures trend, and timely risk aversion prevails.
The author believes that Zheng Mian does not have the conditions for a deep correction (the mutated virus triggers a third wave of global epidemic outbreak is another matter), and the main contract may be between 16,500-17,000 yuan/ Ton consolidation (a brief break of 16,500 yuan/ton has limited impact on the market), waiting for directional guidance, retaining the hope of testing the 17,000 yuan/ton mark. The reasons are briefly summarized as follows:
Firstly, cotton textile mills currently receive relatively sufficient gauze orders, the production and sales rate remains at a high level, the product inventory rate is low, and the raw material inventory is not high, which has a negative impact on cotton futures. The support is strong; secondly, the price of cotton yarn remains high, and the spinning profit of cotton spinning mills is very ideal (the net profit of C32 yarn has generally remained at 1500-2000 yuan/ton since April), and the ability to withstand and digest cotton prices is relatively strong; thirdly It is Zheng cotton warehouse receipts that have flowed out significantly, and the pressure on futures firm prices has continued to decrease. According to statistics, as of July 19, there were 15,055 warehouse receipts for Zheng cotton, a decrease of 4,495 from the same period last year; a decrease of 2,702 from June 18, a decrease of 15.22% in just one month; fourth, the reserve cotton rotation price circuit breaker mechanism The “bottom support” and the expectation that the purchase price of seed cotton in 2021/22 will open and move higher make Zheng cotton’s forward contract very confident; fifth, the cotton growth in Xinjiang cotton areas deviates from previous years and develops slowly. Following the decline in cotton planting area compared with 2020, , unit yields are also facing great challenges. </p
