During the Spring Festival, crude oil, energy, chemicals and other commodity futures rose sharply. Investors, cotton-related industry chains, etc. have strong expectations for the growth of global economy, trade, transportation, and textile and clothing consumption in 2021. Superimposed on the inflection point of the new crown epidemic in European and American countries , Zheng cotton rose sharply after the holiday, and the CF2105 contract price exceeded 16,000 yuan/ton, echoing ICE cotton futures. ICE’s main contract exceeded the 90 cents/pound mark during the Spring Festival, causing tension among short sellers and hedging cotton companies. mood.
Analysis believes that the main force of Zheng cotton will encounter stubborn resistance from short sellers above 16,000 yuan/ton, and a short-term stalemate may form at the 16,000 yuan/ton mark. The author believes that this round of strong rebound of Zheng cotton is coming to an end. Although the long and short sides in the 16,000-16,500 yuan/ton box will still compete repeatedly, it is not easy to hold on to 16,000 yuan/ton in the short term. The reasons are briefly summarized as follows:
First, although Zheng cotton and Zheng cotton yarn prices have surged after the holiday, it still takes time for yarn mills, weaving and clothing companies to resume work and production, and inquiry and raw material procurement have not yet started. Whether it accepts and digests the rise in cotton prices needs to be further observed;
Second, the United States retains the imposition of additional tariffs on Chinese imported goods. Reuters reported that U.S. Treasury Secretary Yellen said on February 18 that the United States will temporarily retain the tariffs imposed by the Trump administration on Chinese goods and will evaluate how to proceed after a thorough review;
Third, the main contract of Zheng Cotton is 16,000 yuan/ Tons above will trigger a large number of cotton hedging orders to enter the market, and the pressure on Zheng cotton’s real market may continue to increase significantly. Judging from the survey, the current cost of 3128 standard grade machine-picked cotton in the Xinjiang supervision warehouse (including Zheng cotton delivery warehouse) is about 15,300-15,500 yuan/ton (gross weight), and the net profit from CF2105 contract hedging and delivery is nearly 1,000 yuan/ton. , Cotton companies are making a lot of money;
Fourthly, the central bank’s monetary policy focuses on stability and does not rule out the possibility of periodic tightening. In the two trading days after the beginning of the new year, the central bank continuously withdrew 340 billion yuan of funds from the open market, and the net withdrawal of funds reached 260 billion yuan, which is rare in recent years. Although monetary policy will not be significantly tightened, it will “open the floodgates and release water” after the holiday. “The expectation has been significantly weakened;
Fifth, the trend of domestic cotton supply exceeding demand and lack of room for speculation in 2020/21 has not changed. On the one hand, Xinjiang’s cotton output continues to reach new highs in 2020/21, and the signing of U.S. cotton imports in 2021 is also in order; on the other hand, Xinjiang’s cotton planting area is expected to continue to grow in 2021, and the total output is worth looking forward to. </p
