As USDA released the 2021 U.S. cotton sown area report on June 30, ICE contracts fell sharply. Affected by this, Zheng cotton futures also ended more than a week of oscillatory rebound and temporarily deviated from the upward channel. The CF2109 contract broke the 15,800 yuan/ton mark, and the long and short parties returned to the 15,500-16,000 yuan/ton range for stalemate and game.
Two medium-sized textile companies in Shandong and Jiangsu said that due to market rumors that 700,000 tons of cotton import quotas with sliding tariffs will be issued in the near future, the current linkage between ICE and Zheng Cotton Sex is very strong. The US dollar sales quotations of foreign cotton by some international cotton merchants and large import enterprises have also significantly improved their reference role for Zheng Cotton.
Obviously, the main contract of Zheng Cotton has been “limited” again near 16,000 yuan/ton, but the author judges that the intensity of Zheng Cotton’s return exploration this round is very limited, and bulls, Cotton companies have not formed a panic or selling mood. The market will still see-saw around 16,000 yuan/ton. The pattern of “bottom below and top above” is difficult to break.
First of all, since late June, most cotton areas in Xinjiang have ushered in a “barbecue” mode, with light to heavy rain and windy weather in some places. High temperature weather is not conducive to cotton budding. , flowering and fruit setting, and can easily cause the spread of pests and diseases. Cotton farmers need to strengthen field management and actively prevent and control cotton aphids and other hazards.
Secondly, at present, cotton textile mills above designated size are receiving and arranging orders relatively smoothly and spinning profits remain high, which forms an effective support for the cotton futures market, and a large number of small and medium-sized enterprises The inventories of cotton and other raw materials in cotton spinning enterprises are still at a low level, and replenishment will gradually begin after mid-July.
Once again, the central bank’s monetary policy will remain stable in the second half of 2021. From June 24 to 29, 2021, the People’s Bank of China conducted a 30 billion yuan 7 interest rate bidding exercise for three consecutive trading days. The day-term reverse repurchase operation breaks the daily tens of billions of yuan reverse repurchase operation mode in the open market since March this year, with the obvious intention of maintaining market liquidity and tilting credit towards small, medium and micro enterprises.
Finally, affected by factors such as the epidemic, excessive currency issuance, intensifying contradictions between supply and demand, and the accelerated recovery of the Sino-US economy, there is a high probability that commodities will continue to rise in the second half of 2021. Domestic Cotton futures are also subject to input pressure from external markets. </p
