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Zheng Cotton Rose Obviously, But The Market Outlook Was Uncertain.

2010/6/25 13:33:00 31

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　　 Since late June, the spot price of cotton has increased significantly, and tens of thousands of Ba Da Guan have been successfully completed.

The introduction of RMB exchange rate reform has made RMB appreciation possible. Under the dual constraints of current price rising and hidden worries of RMB appreciation, Zheng cotton's long-term trend may oscillate broadly, and investor band operation is appropriate.

Since late June, the spot price of cotton has increased significantly. To 24, CCIndex 328 has risen 684 yuan / ton, reported 18155 yuan / ton, and successfully stood at tens of thousands of Ba Da Guan. The introduction of RMB exchange rate reform has made RMB appreciation possible. How will Zheng cotton be under the dual constraints of the current price rising and the hidden danger of RMB appreciation?

　　 High cotton prices are still smooth in the industrial chain.

According to the latest data from the National Bureau of statistics, China's spinning output was 2 million 332 thousand tons in May, an increase of 321 thousand and 700 tons compared with the same period last year, an increase of 16%. From January to May this year, China's yarn production totaled 10 million 213 thousand tons, an increase of 1 million 513 thousand tons compared with the same period last year, an increase of 17.39%. In May, the output of cotton cloth in China was 3 billion 200 million meters, an increase of 500 million meters compared with the same period last year, an increase of 18.5%. From January to May, the output of cotton cloth in China increased to 14 billion 80 million meters, an increase of 2 billion 380 million meters compared with the same period last year, an increase of 20.3%.

China Cotton Storage Information Center survey shows that nearly a month, the yarn sales speed of textile enterprises accelerated, inventory dropped, cloth sales slowed down and inventories increased. As of June 7, 2010, the yarn sales rate of textile enterprises was 98.5%, an increase of 2.1 percentage points compared with the beginning of May. In May, retail sales of clothing, shoes and hats and knitwear totaled 43 billion 500 million yuan, an increase of 22.5% over the same period last year. From January to May, the total retail sales of clothing, shoes and hats and knitwear were 233 billion 200 million yuan, up 23.1% over the same period last year.

In view of this, although China's economy is still facing two risks, the transmission of high cotton prices is still smooth from the situation of yarn and cloth production and marketing, as well as the sale of clothing and textile terminals. Due to the uncertainty of the economic environment, the terminal sales situation in the future is still the focus of attention.

Up to now, although the state has adopted quota and other regulatory measures to alleviate the domestic cotton supply to a certain extent, the supply shortage of the domestic market in 2009/2010 is difficult to change, and demand remains stable. The upward trend of cotton prices this year will continue. There is another market rumor that the state will choose to throw 600 thousand tons of equipment, but whether it will appear more and more phenomenon remains to be seen.

　　 The tension of supply has not improved significantly, and the uncertainty is bigger.

According to the latest supply and demand report of USDA, the global output of 2010/2011 is 24 million 891 thousand tons, which is 2 million 488 thousand tons higher than the current year. The increase in output is mainly from the United States (982 thousand tons), India (326 thousand tons), Brazil (229 thousand tons), Uzbek and Pakistan (all 131 thousand tons), and China only increases 109 thousand tons. Consumption increased by 668 thousand tons compared with the current year. The increase was mainly from China (327 thousand tons) and India (196 thousand tons). The final inventory decreased by 569 thousand tons compared with the current year, mainly from China (441 thousand tons), India (125 thousand tons) and Turkey (102 thousand tons).

Despite a 10% increase in output in 2010/2011, there will still be a larger supply gap, which will lead to a further decline in global inventories. The global inventory consumption ratio will fall to the lowest level in 1994/1995. Overall, the tight supply situation of the global cotton market is difficult to alleviate next year.

China's cotton planting area is flat last year, and the time for listing is expected to be postponed. National cotton market monitoring system in late May national survey shows that in 2010, the national cotton sowing area was 77 million 843 thousand mu, an increase of 154 thousand mu compared with the previous year, an increase of 0.2%. Among them, the actual sowing area of the the Yellow River River Basin was 31 million 112 thousand mu, a decrease of 4.04%; the actual sowing area of the middle and lower reaches of the Yangtze River was 21 million 490 thousand mu, an increase of 5.41% over the previous year; and the sowing area of the northwest inland cotton area was 25 million 75 thousand mu, an increase of 1.46%.

Judging from the growth situation, the growth schedule of the the Yellow River River Basin has been postponed for 7 to 10 days, and the Yangtze River Basin has been postponed for about 10 days. Although the seedling is weak, it has little effect on the long-term growth of cotton. In May, the temperature of Xinjiang cotton area fluctuated greatly, and hailstorm, strong wind and low temperature caused the disaster of cotton. Due to the long growth cycle of cotton, it is too early to predict the price and output of new cotton.

The growth of American cotton is good. The US Department of agriculture's latest cotton growth report shows that as of June 20, 2010, the cotton bud rate in the United States was 27%, an increase of 9% over the same period last year, unchanged from the average in the past five years. The boll rate of cotton in the United States was 4%, a decrease of 1% over the same period last year, a decrease of 2% over the past five years. The growth rate of new cotton in the United States accounted for 62%, which was unchanged from the previous week.

　　 Before May, the export situation of textile and clothing was good.

Textile and garment exports are still recovering. According to the latest data from the General Administration of customs, in May this year, China exported about 16 billion 432 million US dollars of textile and clothing, an increase of 33.53% over the same period last year. According to customs statistics, in the first 5 months of 2010, China exported 70 billion 215 million US dollars of textile and clothing, an increase of 19.33% over the same period last year.

From the point of view of market export, textile Clothing export is closely related to the RMB exchange rate. Because of the relatively stable exchange rate between RMB and Japanese yen, China's exports to Japan dominated are relatively stable. The European sovereign debt crisis led to the appreciation of the euro against the renminbi, which led to a slow decline in China's exports to Europe.

With the RMB Foreign exchange reform The introduction of the policy, the appreciation of the renminbi in the second half of the year has been more definite. According to CICC estimates, RMB appreciation of 5% will increase the cost of the textile and garment industry by 0.8%, while the average net profit margin of the domestic textile and garment industry is only 3% - 5%. According to the data released by the National Bureau of statistics, in May, retail sales of clothing, shoes and hats and needle textiles amounted to 43 billion 500 million yuan, of which total exports amounted to US $16 billion 432 million, and the ratio of exports to domestic sales was 1:2.65. By the end of the year, if the appreciation rate of RMB has reached 3%, it will bring great impact to the textile and garment industry.

Since 2005, unlike the unilateral appreciation of the renminbi against the US dollar, the India rupee shows a broad oscillation pattern against the US dollar, especially during the 2008 period when the rupee of India fell sharply against the US dollar. Although the India rupee has risen to a certain level since the second half of 2009, compared to the RMB pegged to the US dollar, India rupee has reversed its appreciation since June this year. After the RMB exchange rate reform, the currency advantage of India rupee is expected to reappear. As the second largest cotton producing and consuming country in the world, India textile and garment processing capability has been promoted in recent years. In the future, India will have a great impact on China's textile and garment export market based on currency advantage. At the same time, India's labor cost advantage will also help. For the future global textile and garment export market competition, India will be a potential competitor in China and can not be ignored.

Compared with the supply of cotton, the consumption demand of terminal textiles and clothing is relatively stable, and the existence of variables is the transfer of exporting countries caused by exchange rate changes. If the RMB appreciation is restarted, textile and garment importers will transfer to India and other exchange rate dominant parties. Therefore, the appreciation of RMB will have a limited impact on the overall cotton consumption worldwide. The impact of cotton consumption will be the impact of international economic trends on terminal consumption.

Overall, this year and even the next year, insufficient supply will lay the tone of the bull market in the global cotton market, and the global cotton price will remain high, and it will still play a leading role in the formation of domestic cotton prices.

However, the adverse impact of RMB appreciation on China's textile and clothing exports also determines the possibility of wide oscillation in domestic cotton market. Zheng cotton Short term trend is closely related to market mentality.