Last week (February 3-7), commodities in global stock markets generally fell. Zheng Cotton opened at the panic limit last Monday (3rd) and opened sharply lower last Tuesday. In order to stabilize market expectations, relevant national departments promptly arranged for China Cotton Reserve to significantly increase the number of cotton incomings. Market confidence gradually recovered and cotton prices quickly stabilized. Due to the extension of the Spring Festival holiday, gauze companies have not yet started operations, and the spot market is closed. Starting from February 10, textile companies began to gradually resume work. However, because the epidemic has not yet ended, the resumption progress will be slower than in previous years, and cotton consumption will be affected in the short term. The price of cotton substitute polyester is 6,850 yuan/ton, and the price of viscose is 9,600 yuan/ton, consolidating at a low level. The cotton price CNCottonB index price is 13,405 yuan/ton. Compared with the Zheng cotton futures CF2005 contract, the spot premium is 270 yuan/ton.
Futures. Affected by the epidemic, the external market plummeted during the Spring Festival holiday. Under the control of risk aversion panic, Zheng cotton dropped by the limit at the opening last Monday. In order to stabilize market guidance expectations, the country promptly increased the number of rotations. Market confidence gradually recovered, and the cotton price rebounded quickly. Stable, the main contract CF2005 closed at 13,135 yuan/ton last Friday, a weekly decrease of 305 yuan/ton, and the trading volume and positions were relatively stable compared with the year before; at the closing price last Friday, 7,475 positions were maintained, a decrease of 94 hands, with little change. ; Registered warehouse receipts continue to increase, with the total amount reaching 37,068, an increase of 2,940, and 5,420 forecasts, a decrease of 789 from last week. Spot sales are slow, and the profit from the sale of warehouse receipts is greater than that of the spot, stimulating the registration of warehouse receipts. The impact of the epidemic on the market has been basically digested after last Monday’s limit drop, and the increase in sales has improved market confidence. In addition, both sides of the first phase agreement between China and the United States are gradually implementing it. Houdao yarn mills have gradually resumed work this week. The expansion of the epidemic has been basically controlled and should stabilize in the near future. The CF2005 contract is likely to consolidate in the 13,000-13,500 yuan/ton range. The epidemic Trends and Sino-US negotiations will have an impact on the market.
U.S. market: The first phase agreement reached between China and the United States is gradually implemented. U.S. cotton exports are acceptable. China’s increase in the number of imports stabilizes market expectations. The market stopped falling and stabilized. The main March contract closed at $67.79 on Friday. Cent/pound, up 38 points on the week. Technically, it is suppressed by the 60-day moving average, and supported by the 20-week moving average below. If China’s epidemic control gradually improves, there is a high probability of an upward range consolidation in the near future.
Spot aspect. The futures callback before the holiday has mostly completed the necessary restocking of yarn mills. The Spring Festival holiday has been extended, and the spot market is closed. Work will gradually resume this week, and it is expected that spot transactions will gradually occur. During the factory holidays, the state increased the amount of cotton imported from Xinjiang to enhance market confidence and stabilize market expectations. The weekly transaction volume was 65,800 tons, exceeding the total transaction volume in the previous eight weeks, and achieved good results.
New cotton acquisition. As of February 7, 956 companies across the country have declared 5.02 million tons for public inspection, a weekly increase of 10,000 tons, and there are no new companies, indicating that the purchase and processing of new cotton has basically ended.
Operation suggestions. The impact of the epidemic on the market has basically been realized. Factories have begun to gradually resume work this week. The epidemic is also expected to gradually improve, consumption is gradually recovering, and the agreement signed by China and the United States is being implemented in an orderly manner. This week is the turn of the negative market with lower floor prices, and the market is expected to fluctuate upward.
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