Recently, the most impressive commodity among commodities is cotton. In the past 10 trading days, cotton prices have experienced another “roller coaster” – cotton futures on the Zhengzhou Futures Exchange have reached their limit three times in the early period. , and it has experienced a landslide-like decline in the past two days. Why is there such a big contrast?
Behind cotton’s three daily limit increases: Xinjiang’s weather has become the trigger, Funds are fueling the flames, and the industrial chain is in full bloom
The main force of Zheng Cotton changed months on May 15. On the 16th, the main force 1901 hit the daily limit of 17,050 yuan/ton, and after hitting 18,189 yuan/ton on the 2nd, High finishing state. On the 29th, the price limit reached 18,555 yuan/ton again. From the 16th to the 29th, in just 10 trading days, Zheng Mian’s price reached the daily limit three times.
There is a saying in the industry: “China ranks first in global cotton production, and Xinjiang accounts for more than half.” The cotton production in Xinjiang is Cotton prices do have a direct impact. Analysts believe that after experiencing a tepid market in the early stage, cotton prices experienced a restorative rise in June. One of the major triggers was the decrease in cotton production caused by bad weather in Xinjiang. Expectation. It is understood that since May 3, northern China, including Xinjiang and other places, has encountered the strongest sand and dust weather process this year. The Bazhou cotton area in southern Xinjiang has suffered two severe disasters, which has triggered market expectations that the national cotton planting area will continue to decline. The bullish news continues to ferment, and the industry expects that the cost of replanting will increase significantly again. The cotton market’s attention and worries about this year’s cotton production are intensifying. In a short period of time, the contradiction between supply and demand quickly fermented, directing the daily limit drama.
But why did it rise three times in a row?
1. Capital takes advantage of the weather to intervene in speculation
Capital is profit-seeking. According to statistics, at the end of May 2018, the margin stock in the futures market was 200.734 billion yuan, a year-on-year increase of 30.985 billion yuan and a month-on-month increase of 18.492 billion yuan. In May, the amount of margin inflows for six varieties was more than 500 million yuan. Among the active varieties, cotton (632.918 billion yuan) ranked first, which shows how intense the capital speculation is.
2. The spot, reserve cotton and downstream cotton are fully driven by the futures market and are closely linked.
Significantly influenced by Zheng Cotton Affected by the increase, the gross weight of hand-picked cotton of grade 3128-29 in Xinjiang in Shandong warehouse is quoted at 16100-16600 yuan/ton, and the price of high-quality cotton at Aksu station in Xinjiang has increased by 900 yuan/ton. The transaction rate of State Reserve cotton once jumped to more than 80% from the 40%-70% transaction rate before the 16th. Since the 21st, the State Reserve cotton has maintained a daily transaction rate of 100%, and the average transaction price has also been higher than 15%. There was a daily increase of 6.27%.
At the same time, the sharp rise in Zheng cotton yarn has triggered concentrated downstream purchases of polyester-cotton yarn, rayon yarn and even pure polyester yarn. Currently, pure polyester yarn is once again in short supply for more than a month, and rayon yarn inventory has been emptied in Fujian. Supply is particularly tight. Substitutes such as viscose and polyester shorts have also become more popular.
Behind the rapid decline of cotton: strict policies to stabilize growth, and financial speculation to stay away
ThecontinuoussurgeinZhengcottonhasdeviatedfromthecurrentfundamentals.Aftertheirrationalrisecausedbythefuturesside,thecottonpricefluctuatedmoreviolently.Thereservecottontransactionrateincreasedandthemarketbecamenervous.Inordertostabilizethemarket,ChinaCottonReserveManagementCo.,Ltd.issuedanannouncementonmattersrelatedtotherotationofreservecottonin2017/2018.Theannouncementclearlyrequiresthatthetransactionofreservecottonrotationislimitedtotextilecottonenterprisestoparticipateinthebidding,andnon-textilecottonisstopped.Enterprisesparticipateinbidding.Inaddition,theChinaCottonAssociationalsoannouncedthatafterinvestigationandcommunicationwithrelevantdepartments,itwasconfirmedthatmycountrycurrentlyhassufficientreservestoensurerotationdemand.Itcanalsoincreasemarketsupplythroughothermeasuressuchasincreasingimportedcottonquotas.Thereisnoshortageofsupply.Therefore,thereservecottonportcurbedthefurtherintensificationofspeculation.ZhengMianhasalsodeclinedinthepasttwodays,withthedropreachingnearlyathousandpoints.
Market regulation and speculation still exist, and cotton prices may continue to fluctuate violently in the near future.
Although cotton rose sharply in the early stage, the abnormal market fluctuations were affected by factors such as speculation. However, it is undeniable that since the beginning of this year, the production and sales of textile enterprises have been stable and improving, and yarn profits have improved significantly year-on-year. Cash flow has increased while the acceptance of high-priced raw materials has also increased. At the same time, most types of yarn inventories are also relatively tight. , is also optimistic about the yarn market in the third quarter. On the other hand, although policy regulation has stabilized the market, in the long run, the changeable cotton weather may still become the main factor for speculation. Therefore, the author believes that market regulation and speculation will still exist in the future, and cotton prices may still fluctuate violently. </p
