After a short adjustment, Zhengzhou cotton futures resumed their upward trend, not only returning to above 15,000 points, but also within striking distance of the 20-month high hit on January 8.
The USDA will release its monthly supply and demand report next week. Will the report provide another positive benefit? What will be the demand situation for cotton after the holidays? How much room for futures prices to rise in the short term?
Reporter: Will the USDA monthly supply and demand report to be released next week continue to adjust the global cotton supply and demand situation in a favorable direction?
CITIC Futures Wu Xinyang: The February USDA monthly report mainly involves the forecast of production and sales data in 20/21, which may be due to the expected easing of Sino-US relations and the turning point in the growth of new cases of the epidemic in Europe and the United States. And yesterday’s high exports of US cotton made some positive adjustments to global cotton consumption and exports.
Ma Xin, Senior Researcher of Agricultural Products at Capital Futures: Judging from the trend of ICE cotton, USDA’s February supply and demand report is still expected to be positive, with export estimates expected to be raised, and year-end inventory estimates Then lower it.
Reporter: As the Spring Festival approaches in China, textile companies are gradually taking a holiday. How do you view the development trend of downstream orders and cotton demand after the holiday?
CITIC Futures Wu Xinyang: From the raw material stocking situation of the cotton spinning industry, we can see the industry’s attitude towards the market outlook. From a seasonal comparison, this data is already a new high in the past three years, which shows that the industry is still optimistic about future orders. The global macro-environment is further recovering, and under such expectations, market demand will not be too weak. In addition, the inventory of finished products in the industrial chain has reached a new low in the past five years. The post-holiday construction boom and the rebound in orders will further stimulate the transmission of demand to the upstream.
Ma Xin, senior researcher of Capital Futures Agricultural Products: There is a demand for funds to be withdrawn before the holidays. Downstream textile and yarn companies are on holiday, and stocking has basically come to an end. Textile companies are expected to start receiving orders again after the holiday. At present, most textile companies receive orders in March. Cotton demand will be further released when the epidemic situation stabilizes. However, cotton demand will soon enter the off-season for cotton use, and cotton demand may be seasonally discounted.
Reporter: What is the driving force behind Zheng Mian’s recent rise? Is there room for further upside in the short term?
CITIC Futures Wu Xinyang: The industrial drive has weakened, and the short-term rise is mainly driven by good news, especially Sino-US relations. But the good news for the rise is always based on good fundamentals. Behind the emotional ups and downs, the essence of cotton’s rise is still attributed to the fundamental background of futures premium + low industrial cost inventory. With the industry-driven recovery after the year, spring plowing will bring about weather speculation, and there is huge room for imagination in cotton.
Ma Xin, senior researcher at Capital Futures Agricultural Products: Zheng Cotton’s recent surge is mainly driven by funds. The operating rate of enterprises is declining as the holidays approach, but the overall inventory accumulation trend is not serious. , funds are looking for low-value areas for speculation. In the short term, it is mainly due to macroeconomic changes, increased capital inflows, increased freight rates during holidays, and pressure on 16,000 yuan/ton. </p
