As of Monday afternoon’s close, both Zheng cotton futures and cotton yarn futures had fallen to varying degrees. Chen Xiaoyan, a cotton researcher at Tianfeng Futures, told reporters that several agricultural products with low valuations and low volatility last week, such as rubber, cotton, sugar, and paper pulp, have risen one after another. Due to relatively abundant market liquidity, funds have concentrated on long positions in several similar varieties. . But from a fundamental perspective, the market contradictions of these commodities are different. Among them, Zheng Mian’s main rising logic is “opening the profit window for cotton imports.” Strong external prices have supported domestic cotton prices. Although there are still a large number of spot resources in the market, because domestic cotton is almost all sold at point prices, the futures market is relatively strong, causing spot quotations to rise accordingly. Although some futures and spot traders have lowered their basis spreads, procurement costs have still increased significantly. .
It is reported that cotton prices are rising but yarn prices are not rising, and the production losses of textile enterprises are further expanding, which drives the market to seek lower-priced cotton resources. In addition to cotton reserves, the only available resources in the market are imported cotton. The strong ICE cotton futures market price and the strong basis of US cotton have led to the lack of cost performance of US cotton. Brazilian cotton and Indian cotton, whose basis is at the lowest value in the same period in history, have become the “darlings” of the market. The market demand for Brazilian cotton and Indian cotton is booming. In just three days from August 4 to August 6 last week, the amount of cotton auctioned by the Indian Cotton Company reached 330,000 tons, exceeding all sales from March to July. quantity.
“On the one hand, the low cost performance of U.S. cotton makes it difficult to compete with Brazilian cotton and Indian cotton. On the other hand, international traders who have swept through low-priced Brazilian cotton and Indian cotton have been buying large amounts of spot goods in the futures market. Hedging. The decline in Zheng Cotton actually started from Friday night trading time, and the decline in internal and external markets showed a high degree of consistency in time.” Chen Xiaoyan said.
Wang Xiaobei, senior cotton analyst at Hongye Futures, believes that since July, domestic Zheng cotton has shown a oscillating and strong trend driven by post-epidemic recovery and US cotton. From a fundamental point of view, the negative effects have been exhausted for the time being, but there are no obvious positives. The overall supply and demand are relatively loose, and the downstream seasonal recovery is not obvious. Most of them are based on consumption and mining. In the short term, new cotton production is expected to support cotton prices, while the long-term trend depends on the recovery of downstream demand after the epidemic. It is expected to show an oscillating trend in the near future, with an upward trend at the bottom. Later, we will continue to pay attention to the weather and changes in Sino-US trade relations. In addition, in late June, domestic downstream consumption entered the seasonal consumption off-season ahead of schedule. At the same time, there was a lack of foreign orders, and the fundamentals of cotton yarn itself were weak, with an oscillating trend affected by raw material prices. Since August, the operating rates of domestic yarn mills and cloth mills have further declined, inventories have increased, spot goods are not flowing smoothly, and futures prices of cotton yarn have fallen, and the profits of yarn mills have been further compressed. Recently, there have been signs of improvement in downstream consumption, with shipments improving slightly in some areas. The operating rates of yarn mills and cloth mills have basically stabilized and stopped falling. The peak seasonal consumption season of Gold, Nine and Silver Ten is expected, and yarn prices may be supported.
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