Last week (March 2-6), in-turn transactions with internal and external price differences greater than 800 yuan were suspended for 2 days, which had a limited impact on the market. After trading resumed last Wednesday, the daily listing volume increased to 15,000 tons, and the transaction rate remained High position. Last week, cotton substitute polyester was priced at 6,420 yuan/ton and viscose at 9,600 yuan/ton, which were relatively stable and consolidating at a low level. The cotton price CNCottonB index price is 12,784 yuan/ton, a weekly decrease of 261 yuan/ton. Compared with the Zheng cotton futures CF2005 contract, the spot premium is 184 yuan/ton, a weekly decrease of 681 yuan/ton.
Futures. After the inertia dropped to near the previous low on Monday, speculation and hedging buying increased, and the market rebounded rapidly. It continued its upward trend throughout the week. Zheng Cotton’s main contract CF2005 closed at 12,600 yuan/ton last Friday, a weekly increase of 420 yuan/ton. tons, the market rose rapidly, trading was active, and the trading volume increased by 8.9%. The May contract was partially moved to September to wait for long-term opportunities. Spin mills have resumed work one after another, but production capacity has been restored slowly. The epidemic has caused domestic sales of winter clothing and spring clothing to be severely hindered and backlogged. The epidemic has spread in major export areas, Europe, the United States, Japan and South Korea. New export orders have been significantly insufficient due to its impact. Cotton spot stocks are sufficient, and short-term cotton prices have further risen. Facing resistance, the downside space is limited, and the probability of range-bound fluctuations is high.
US market: China’s purchases increased, sales data were good, and the low rebounded to the early platform and then fluctuated in the range. The main May contract closed at 62.8 cents/pound last Friday, rising weekly. 100 points. U.S. cotton has obvious price advantages, stable quality and supply, and Chinese purchases are expected to increase. If the epidemic is controlled, the market will fluctuate upward. Continue to pay attention to the epidemic and the progress of China’s procurement.
In terms of spot goods. Futures hit new lows and the pullbacks last Wednesday and Friday triggered some transactions at the price point for rigid demand. The current transactions are still mainly for rigid demand, and active replenishment is rare. Because cotton merchants have alternative routes for delivery of storage and warehouse receipts, spot sales are stable. In the context of insufficient new orders, incomplete recovery of production capacity, and the global spread of the epidemic, yarn mills have made small and cautious purchases. Warehousing operations in Xinjiang are insufficient. With road transportation and personnel exchanges out of Xinjiang being controlled, spot transactions are mainly concentrated in inland warehouses. Some customs-cleared imported cotton sold at point prices showed a price advantage when futures fell, and transactions were active. The transaction price of Xinjiang cotton in inland warehouses is 13,000-13,500 yuan/ton. The price of imported cotton through customs clearance is close to that of Xinjiang cotton. Indian cotton is 13,200-13,700 yuan/ton, Brazilian cotton is 13,500-13,800 yuan/ton, and West African cotton is 13,500-13,700 yuan/ton. Australian cotton 15,600-16,500 yuan/ton. At present, cotton prices are at a relatively low level. Spinners with low inventories can consider gradually replenishing their inventories at low prices or buying a certain amount of hedging at low points to reduce cotton costs.
Operation suggestions. The epidemic is spreading around the world, and financial markets have fluctuated frequently. The epidemic in China has been effectively controlled, factories in non-key epidemic areas have basically resumed work, and consumption has gradually started. Cotton prices are currently at a low level, with insufficient upward momentum and great resistance, and relatively small downside space. The probability of range fluctuations is high in the near future, so it is better to move in quickly and exit quickly or to wait and see. </p
