Recently, in response to the mutation of the new coronavirus, countries have adopted more stringent blockade measures, and the prevention and control level has been adjusted to the highest level. There is a strong pessimistic atmosphere in the market, and the light of hope brought by the arrival of the vaccine is dimming. . Commodities have started a new round of adjustment, and the adjustment is relatively large. Of course, there are differences between products, and cotton has been relatively resilient.
The performance of cotton this time was a bit beyond my expectation. I originally expected that when crude oil and other bulk commodities corrected, cotton would follow the adjustment, but cotton has maintained a strong and volatile trend. The CF2105 contract has always been at 14,800 yuan/ton. Fluctuating above, what factors are supporting cotton prices?
According to the sample survey of the National Cotton Market Monitoring System, as of the beginning of December, the average cotton inventory usage days of the sampled companies was approximately 31.4 days (including the quantity of cotton imported to Hong Kong), a decrease of 11.6 days month-on-month. The national cotton industry inventory is estimated to be approximately 667,000 tons, a decrease of 26.9% month-on-month. The decline in raw material inventories is mainly due to market factors. When demand due to the epidemic has not yet recovered significantly, companies try to reduce raw material and product inventories to ensure operational safety. As the pre-holiday replenishment season gradually arrives, many low-inventory companies are facing rigid replenishment needs. Under such a background, it is difficult for raw material prices to see a significant correction. In addition, the quality of cotton has declined this year, and warehouse receipt registrations have been significantly lower than the same period last year, which has also played a role in supporting cotton prices to a certain extent.
It is understood that most companies’ orders this year are scheduled until January. There are domestic orders and foreign trade orders. Although the orders are somewhat differentiated, the profits are relatively low. Part of the reason is that downstream customers continue to lower prices due to the epidemic, and the increase in cotton prices is higher than the increase in cotton yarn, which also eats up part of the profits. The rise in the RMB exchange rate has also had some negative impacts on export companies. Although there are many orders, the decline in profits is an indisputable fact. Therefore, most textile people are not optimistic about the space above cotton prices, and there is still considerable controversy over its rise and fall in the short term. Perhaps it is the balance between the long and short sides that keeps the market in shock. </p
