Since January 2021, Zheng Cotton’s main contract CF2105 has been continuously oscillating and correcting from the annual high of 15,610 yuan/ton. Although the bulls tried to rebound on the back of 15,000 yuan/ton, both attempts ended in failure. The market, The short-term bullish sentiment on the market has dropped significantly.
In recent days, in addition to the relatively active basis price transactions of cotton traders and processing enterprises, both basis price quotations and “fixed price” spot transactions have gradually become deserted, and domestic lint cotton sales have further slowed down. Some Xinjiang ginning mills are obviously reluctant to sell, with reduced quotation resources or even no external quotations.
What factors have put pressure on Zheng Cotton’s recent market? The author summarizes the following points: First, the central bank has withdrawn liquidity, and domestic stock markets, bond markets, and commodity futures have generally fallen. Under heavy pressure, Zheng cotton has continued to fall; second, entering late January, clothing prices in Jiangsu, Zhejiang, Shandong, Hebei and other places have and weaving factories have been on holiday or announced holiday plans. Coupled with the early closure of textile cities in coastal areas, cotton yarn and gray fabric shipments have slowed down significantly, and terminal pressure has been transmitted to the cotton futures market; third, Xinjiang cotton total in 2020/21 The output is significantly higher than expected. This year’s domestic cotton supply is very sufficient, and there is no gap or conditions for speculation. Fourth, the direction of Sino-US relations is still full of uncertainty, and it is always the sword of Damocles hanging over the cotton market.
However, the author believes that Zheng Mian currently does not agree with the CF2105 contract proposed by some institutions and cotton-related companies to return to 14,000 yuan/ton. Although the main force of Zheng Cotton is expected to consolidate at 14,500-15,000 yuan/ton in the short term due to the impact of demand, currency liquidity, and external factors, the target after short-term stabilization and accumulation is still above 15,500 yuan/ton. Do not “chasing short” excessively. “Sell down” mainly for the following three reasons:
First, the general direction of my country’s monetary government easing remains unchanged in the first quarter of 2021. On January 29, the central bank once again released 98 billion in liquidity, indicating that there was no “turning point” in the monetary easing policy in the first quarter; secondly, vaccination of the new crown vaccine is accelerating globally, the epidemic is expected to be controlled, and textile and clothing consumption will accelerate to pick up in 2021 until Return to pre-epidemic levels; third, cotton costs, Zheng cotton warehouse receipts, and effective forecast quantities have dropped significantly year-on-year, which will help cotton prices rebound after the Spring Festival. Judging from the survey, as of the end of January, the comprehensive cost of Xinjiang cotton 3128B in the regulatory warehouse was about 14,500-14,700 yuan/ton (including financial costs). Therefore, when the CF2105 contract is lower than 14,700 yuan/ton, cotton processing companies have almost no hedging enthusiasm. . </p
