In recent times, the trend of cotton at home and abroad has diverged significantly. ICE cotton has continued to rebound, rising by more than 10.7% from the low point in early April, while domestic cotton futures rose only 2.74% over the same period. Domestic cotton prices are weak because domestic cotton spinning companies have lowered cotton yarn prices, reduced inventories, and reduced cotton purchases. They have also been affected by the psychological impact of the state cotton reserve auction and increased import quotas. In the context of sufficient domestic cotton supply, the “cowhide” trend of cotton will continue, and a major rebound will not occur until the downstream replenishment cycle restarts.
Downstream companies are still destocking
Cotton spinning companies in early March The replenishment cycle has brought the price of cotton yarn to a higher level. Cotton prices have also risen to more than 17,000 yuan/ton, and spinning profits are also 4,000 yuan/ton, a new high since 2015. However, subsequent cotton yarn orders did not keep up. Most cotton spinning companies just maintained previous orders. The cotton yarn industry gradually destocked and randomly lowered cotton yarn quotations. 32-count cotton yarn was lowered from 25,780 yuan/ton in early March to 24,110 yuan/ton (quoted on April 16), a decrease of 1,670 yuan/ton. Correspondingly, 328 cotton has also been reduced from 16,820 yuan/ton to 15,360 yuan/ton (quoted on April 16), a decrease of 1,460 yuan/ton. However, the price difference between cotton and cotton yarn is still as high as 8,750 yuan/ton, and spinning profits are at a historical high. level, there is clearly room for further compression. If spring demand does not keep up, textile companies may lower cotton yarn prices or even sell at a loss in order to seize market share, which is not conducive to rising cotton prices.
Judging from the cotton 328 index and the days of cotton yarn inventory in textile mills, there is an obvious positive correlation between the two, that is, the demand for cotton yarn affects the price of cotton, or the price of cotton affects the purchase volume of cotton yarn. . Before 2020, it can be seen that cotton yarn inventory data lags behind cotton prices. After that, cotton prices lag behind cotton yarn inventory days, that is, demand will guide cotton price changes after 2020. Cotton spinning companies are still destocking, and may start to restock at the level of August last year, or they may start replenishing soon, but the author believes that the former is more likely, at least yet, we have not seen a large increase in orders. information.
The planting area has slightly decreased
From the cotton planting intention survey, my country and the United States cotton The planting area decreased slightly. Survey results from the National Cotton Market Monitoring System show that China’s intended cotton planting area in 2021 is 45.426 million acres, a year-on-year decrease of 256,000 acres, or 0.6%; the U.S. Department of Agriculture’s report at the end of March believes that all cotton planting areas in the United States in 2021 are expected to be It was 12.036 million acres, a year-on-year decrease of 56,500 acres, or 0.46%, which exceeded market expectations.
With a slight decrease in cotton planting, the US Department of Agriculture predicted in its April supply and demand report that global cotton production in 2020/2021 will be 24.612 million tons, an increase from the previous year. The annual decrease was less than 30,000 tons; consumption was 25.658 million tons, an increase of 3.248 million tons over the previous year. The global cotton supply and demand gap was 1.046 million tons. The inventory-to-consumption ratio was still as high as 79.30%. China’s inventory ratio was 95.25%, which was 95.25% higher than that in 2018. June’s 67% was much higher. Therefore, even if the global epidemic prevention and control situation improves, it is not enough to rely solely on a rebound in demand to change the relationship between supply and demand. A reduction in supply is needed to increase the rising factor.
ICE cotton is difficult to replicate the same period in 2018
Since the outbreak of the new coronavirus pneumonia epidemic, ICE cotton has After bottoming out and rising to a high of 95 cents/pound, funds began to reduce their long cotton orders. On February 23, the fund’s net long orders reached 97,000. At this time, the closing price of ICE cotton was 92.58 cents/pound. It then continued to reduce its long orders until March 9 before it began to increase slightly. However, in the past three weeks, as the price of ICE cotton has continued to fall, funds have been reducing their positions. On April 6, the fund held 74,000 net long orders.
Judging from the spot side of U.S. cotton, the sales progress of U.S. cotton exceeds 90%, which is similar to the same period in 2018. Before the May contract expires, if the fund takes advantage of the shortage of spot The subject matter forces traders to move positions or adjust prices, which may increase futures prices again. However, what is different from the current situation is that the fund continued to add long positions as the price rose at that time, and the net long position reached 118,000 lots. However, the current net long position does not conform to the trend of adding positions. If funds do not add long positions in cotton in the next few weeks, then the probability that ICE cotton will form a high in the first half of the year at 95 cents/pound will be true.
At present, there are still many factors limiting the rise in cotton prices. For example, whether the state reserve cotton auction will be opened, whether additional quotas will be issued in order to restrain commodity prices from rising too fast, etc. The COVID-19 epidemic is also restricting the recovery of cotton demand. The rise and fall of domestic cotton is easily affected by the replenishment cycle, and it is likely to rise again in the short term. Not much space. </p