Recently, Zheng Mian’s exciting rally seems to be stopping. Futures prices fell sharply after hitting a more than three-year high last Wednesday.
The traditional demand peak season of Golden Nine and Silver Ten is approaching. How is the start-up situation of textile companies and what are the expected future orders? The reserve cotton rotation has stopped non-textile cotton companies from participating in bidding. What is the market impact? How will Zheng Mian’s subsequent market develop?
Q: When the reserve cotton rolls out, non-textile cotton companies are stopped from participating in the bidding. What is the market impact?
[Li Min, Soft Commodity Researcher at Huishang Futures Research Institute]: We know that the reserve cotton rotation adopts auction transactions, which means that the basic data such as the quality and quantity of the reserve cotton to be sold pass through The trading market pre-announces the quoted price, and the qualified buyer increases the price independently. According to the principles of price priority and time priority, the transaction is completed at the highest purchase price, and the two parties sign a purchase and sale contract through the trading market. After the change in the rotation rules, the bidding group has been greatly narrowed, which has undoubtedly dealt a heavy blow to the average transaction price of reserve cotton. Lower-cost cotton has flowed into the current market, which has a negative impact on the market.
[Ma Xin, Senior Researcher of Capital Futures Agricultural Products]: The measures announced on the evening of the 23rd to stop non-textile cotton companies from participating in bidding are intended to discourage traders from hoarding goods and curb rising prices. Excessive cotton prices reduce the circulation rate of intermediate links in the cotton industry chain.
[CITIC Futures Wu Xinyang]: In the short term, this is a policy adjustment for the cotton market with high growth. The market speaks from the picture, and more of the policy is understood as Negative. On the surface, reducing potential buyers of reserve cotton is equivalent to weakening the bidding pressure of buyers. However, the current spot market sentiment is still exuberant, and the decline in the market has prompted more point-price transactions. The demand for traders to stock up still exists, but it is passed on from the reserve cotton. Arrived at the spot cotton market.
Question: The traditional demand peak season of the Golden Nine and Silver Ten is approaching. How is the start-up situation of textile enterprises and subsequent orders? What to expect?
[Li Min, soft commodity researcher at Huishang Futures Research Institute]: According to Wind data, the latest cotton textile PMI new orders and production volume data have increased year-on-year, and cotton textile PMI cotton yarn Inventories and cotton inventories have declined year-on-year. As of August 16, the Purchasing Managers Index (PMI) of the cotton textile industry: new orders were 56.90%, a year-on-year increase of 8.39%; production volume was 58.92%, a year-on-year increase of 3.7%; cotton yarn inventory was 44.62%, a year-on-year decrease of 13.6% ; Cotton inventory was 49.23%, a year-on-year decrease of 1.5%. We know that manufacturing PMI is a very important indicator among leading economic indicators and is highly time-sensitive. It can be seen from the above data that the current situation of my country’s textile threads is relatively optimistic. Orders for the Golden Nine and Silver Tens are arriving one after another, and the demand side of the cotton textile industry continues to pick up.
[Ma Xin, senior researcher of Capital Futures Agricultural Products]: Affected by weak downstream demand, the operating rate of textile enterprises has declined, and the operating rate in Guangdong, Zhejiang and other places in the south has dropped to about 30-40% , the operating rate of Henan and other places in North China has rebounded. The number of new orders from textile companies is insufficient, and companies are mainly rushing to make early orders. Cotton stocks are still at historically low levels.
[CITIC Futures Wu Xinyang]: The market has high expectations for the textile gold, nine and silver ten peak quarter reports, especially since the epidemic prevention in Vietnam’s economic center is out of control, and the transfer of orders may lead to new domestic orders. part. But overall, the demand for profitable cards is gradually being displayed on the card table. At present, the market has reached a consensus on the demand driver. It is expected to be too strong, and the consistent actions brought by it make the further rising space of cotton more limited: 1) The stocking of cotton mills and cloth mills has reached a high level; 2) The market speculation has reached a long position. to high levels, consistent expectations have increased; 3) Consumption recovery in the current post-epidemic era is still the main line, but the global consumption estimate in the USDA August report is close to the ceiling value of the past 20 years.
In addition, how to understand that the off-season from May to July is not slow? In the context of tight foreign trade shipping capacity, it is worth considering whether orders have been advanced. If so, the peak season may not be busy.
Q: New cotton will be launched in September. What is the expected output and opening price?
[Li Min, Soft Commodity Researcher at Huishang Futures Research Institute]: Early data has shown that cotton production may be reduced this year, with strong expectations for a rush to harvest seed cotton and a higher opening price estimate. .
[Ma Xin, Senior Researcher of Capital Futures Agricultural Products]: New cotton will be launched one after another in September. It is expected that the output of new cotton will not change much, but the continuous expansion of production capacity of Xinjiang ginners will raise the expected opening price. .
[CITIC Futures Wu Xinyang]: The situation of plentiful and scarce seed cotton resources will not change. There will definitely be rush to harvest, but the price may depend on the downstream attitude. According to a survey of cotton farmers and ginners at the end of June, the consensus price was 7-7.5 yuan per kilogram. After a wave of cotton rises at the end of July, the consensus price has increased to 7.5-8 yuan per kilogram. At that time, in order to avoid the risk of taking orders at high prices, ginning mills will use the market price as an important reference. Once the consumption that supports prices is not prosperous in the peak season, the motivation to take orders at high prices will also weaken.
Q: Zheng Mian has experienced a high correction, how will the market develop in the future?
[Li Min, Soft Commodity Researcher at Huishang Futures Research Institute]: Recently, affected by “the Federal Reserve meeting stated that it may reduce stimulus measures this year” and “changes in the rules for the rotation of cotton reserves” Due to the double negative impact, cotton prices fell back. But laterThe “Golden September and Silver Ten” boosting consumption and the rush to harvest seed cotton in the new year are unavoidable topics. Before these two drives are over, cotton prices will maintain a bullish view in the medium and long term.
[First Futures Agricultural Products Advanced Researcher Ma Xin]: Zheng Cotton has experienced a high correction, and it is expected that the spot price of new cotton will still lead the futures price logic. There is a high probability that the market will continue to rise after a correction, and the high point will be 18500-19000.
[ CITIC Futures Wu Xinyang]: The exhaustion of fundamental positive factors does not mean that the price top is coming. As the price breaks further upward, the emotional and financial aspects are very likely to take over the handover of the fundamentals. At the same time, policy We need to pay attention to the drivers, such as the news of large-scale purchases of US cotton to replenish the national reserve inventory.</p
