In mid-July, cotton prices remained strong and volatile. Since the main contract of Zheng cotton, CF2009, exceeded 12,000 yuan/ton last week, bullish funds have been eager to try and have a strong hope for a rise. After a long and short battle, Zheng cotton finally rose to a high of 12,250 yuan/ton, and then returned to the shock range. run. Foreign cotton ICE futures are relatively strong. After the main contract stood at 60 cents/pound, the center of gravity has steadily moved upward, rising to 64.31 cents/pound last Friday (July 10). Although the upward path is long, the joint rise in internal and external markets has also brought a little bit of relief to the textile industry.
The USDA’s monthly supply and demand forecast report was released last Saturday (July 11). This may be another report that has strong support for the external market this month after the release of the planting report. In this month’s forecast report, USDA lowered its global production forecast for 2020/21, and also lowered its US export and year-end inventory forecasts. Among them, the end-of-year cotton inventory in 2020/21 is estimated to be 6.8 million bales, and the June estimate is 8 million bales. U.S. cotton production for 2020/21 is forecast at 17.5 million bales, down from the June estimate of 19.5 million bales. It is worth noting that the main reason for the downward revision of US cotton production in this report is due to the drought in Texas. The report data has been lowered. Market participants’ expectations for a decline in US cotton production in the new year have further increased. In addition, the low rate of high-quality cotton in Texas has also further strengthened. Adding to industry concerns.
Since July, some areas in Xinjiang have been experiencing drought. Heavy rainfall has caused floods in some cotton-growing areas in the Yangtze River Basin, which has adversely affected the normal boll-setting and topping of cotton. Market investors have taken the recent unfavorable weather at home and abroad as a subject of speculation, and have a strong desire to push up cotton prices.
The author believes that since June, external weather operations have been going on for a period of time, and according to the current domestic cotton planting areas, the space for production decline due to weather effects is still relatively limited. In addition, although China has continued to overbuy U.S. cotton, how many subsequent orders can be signed? Whether the subsequent positive support can be sustained may be the key. Therefore, it is recommended that industry players be cautious in trading, and investors should set stop losses and control risks on the basis of short-term and long-term holdings. The upstream and downstream industries continue to focus on destocking, timely return of funds, and stable operations. </p
