According to Xinhua News Agency, high-level representatives from China and the United States had another phone call on economic and trade issues on November 26, and said: “The two sides discussed resolving each other’s core concerns, reached consensus on resolving relevant issues, and agreed on the first We will maintain communication on the remaining matters of the first-phase agreement negotiation.” Since the relevant statements have not changed much from the progress of the previous negotiations, cotton market players gradually have differences in their expectations for Sino-US economic and trade negotiations, and subsequently, the ICE US cotton external market also rebounded and fell. Zheng cotton futures, after maintaining a volatile situation for nearly a week, failed to break through the 12,900 yuan/ton mark as expected. After opening this morning, they started to fall again. The CF2001 contract dropped to a low of 12,700 yuan/ton during the session, which made many Cotton-related businesses feel helpless.
Ending As of November 27, the total number of cotton warehouse receipts nationwide was 16,839, an increase of 851 from the previous day; there were 5,411 effective forecasts, a decrease of 232 from the previous day. It can be seen that the total amount of warehouse receipts has once again effectively suppressed the upward trend of Zheng cotton, but the overall weak situation has slowed down the hedging rhythm of some industrial funds. At the same time, it also reflects that as prices fall again, the mentality of industry players has become more cautious. Waiting and watching seems to be the best way to deal with it.
By comparing the disk data, it can be seen that investors’ confidence in the CF2001 contract has declined, and the pace of moving positions to the CF2005 contract has also accelerated significantly. As of November 28, the CF2005 contract position was 592,000 lots, which was significantly higher than the CF2001 contract position of 473,000 lots. After many intense games between the long and short parties, as the power of industrial hedging and short positions has grown and the good macro news has faded, the long positions have been significantly reduced recently, and the short positions have temporarily gained the upper hand.
The price of Zheng cotton futures is falling. For some cotton producers who have done futures and spot hedging and arbitrage, the risk is relatively controllable. For some companies that have time to take corresponding risk prevention measures in the future, they have turned their attention to the upcoming rotation of cotton reserves. According to the views of some Xinjiang cotton companies, the rotation is about to begin, and the recent fluctuations in futures price ranges will not have much impact on the spot market. Although the current futures price has fallen, the room for further exploration is expected to be limited. It can be seen that the recent central reserve cotton rotation policy has formed a strong support for stabilizing the cotton market mentality. Most ginning companies in Xinjiang are still producing and processing steadily.
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