Cotton: After The Scenery Is Entangled.

"From last year to now, cotton prices fluctuated too much. Now our business situation is not particularly good. Because cotton prices have dropped, many of the stocks we bought at high prices have not yet been sold.

And now the cotton demand of downstream cotton textile enterprises is not very strong.

Nanyang

According to the reporter, Mr. Zhang only wants to buy at the end of last year at a high price of 29000 yuan / ton.

As of Friday's close, the Zhengzhou Cotton Exchange's 1109 main contract closed at 28170 yuan / ton, which has fallen 23.8% in the past month, after hitting 34870 high in February.

Cotton spot demand weakened

Compared with last year's boom, the futures market may be able to describe it in a calm way.

Wang Yong, an analyst at Hongyuan futures, pointed out that the atmosphere is a gradual process.

The high price of cotton has been affected by the gap between supply and demand, and now the leading factors of the market have been quietly changing, indicating that the cotton textile enterprises are indeed in a very poor situation.

"The desire of small and medium cotton enterprises to purchase is not strong now.

Compared with previous enterprises in the procurement stage, enterprises are now in a cycle to inventory.

And now the quality of cotton is relatively poor, plus the price is relatively high, so now the procurement is very cautious.

Fu Xiaoyan, a South China Futures analyst, told reporters.

Wang Yong further pointed out that the situation in the spot market is actually the result of the pmission of high cotton prices step by step.

Cotton is indeed a relatively volatile species. The huge shock of high cotton prices in the futures market will bring some psychological tremors to the spot traders. This fluctuation has brought some uncertainty to the spot traders, and the wait-and-see attitude has also been formed.

Dong Shuzhi, manager of cotton business department and senior cotton analyst at Peking University Founder group, pointed out that the appreciation of the RMB appreciation, the earthquake in Japan and the recovery of the global economy were not so ideal.

This shows that textile enterprises have reduced orders.

Because of the decline in purchasing intention of cotton textile enterprises, it can only make cotton purchasers like Mr. Zhang himself bear the losses caused by the fall in cotton prices.

Mr. Zhang told reporters that his company still has nearly 1000 tons of cotton, and he also made a hedging in the futures market. However, because of the tight financial position of enterprises, the effect of hedging on the decline of cotton prices is also limited.

Cotton futures are strong, weak, strong and weak.

At present, both the cotton futures of the Zhengzhou exchange and the cotton futures of the ICE are divided into two types: far month contracts and nearly monthly contracts.

The 1109 main contract in China corresponds to the old cotton in 2011, while the 1201 contract in the far month corresponds to the newly listed cotton next year.

As of Friday's closing, the price difference between the two contracts reached 2690 yuan / ton, while the price difference between ICE's cotton contract in recent months and far month contracts also appeared near strong and weak. However, the spread of ICE was far greater than that of the Zhengzhou exchange's cotton futures.

For the reason for this phenomenon in the futures market, Wang Yong told reporters that the gap between supply and demand in the recent months has already existed, while the far month contract shows a weaker result than the contract in the near future because of the expected expansion of cotton production.

In March 30th, the NDRC introduced the plan for temporary storage and storage of cotton in 2011, which was interpreted by the market as stimulating the enthusiasm of Chinese farmers to grow cotton and stabilizing the planting area of cotton.

The plan decided that the provisional purchase and storage price from September 1, 2011 to March 21, 2012 would be 19800 yuan / ton.

At present, there is a strong and weak internal and external situation comparing domestic and foreign cotton futures contracts.

Wang Yong pointed out that the main reason for the recent emergence of this pattern may be that the cotton planting area projected by the Ministry of agriculture of China and China cotton information network expanded by 5%~10%, and before the US Department of Agriculture announces the expected expansion of planting area, the market will have a pre forecast period of about 20%.

This is also the main reason leading to the ICE cotton far month contract being far weaker than the contract in recent months.

In addition, some analysts expect that if the weather conditions of the main producing countries such as Pakistan, India, Brazil and China are favorable, the situation of global cotton shortage will ease up by 2012, so the price will probably fall by half.

However, according to the US Department of agriculture (USDA) released on Thursday, the US cotton planting area in 2011 is expected to be 12 million 566 thousand acres, an increase of 13.8% over the 11 million 40 thousand acres planted in 2010, far below the average forecast of 20% increase.

Under such a large amount of data, ICE's May contract rose 7 cents to reach a daily limit.

By the end of March 31st, US cotton futures rose 38.3% in the first quarter, the best commodities since 2010.

Waiting for the peak demand season in June

From the current trend of cotton, Fu Xiaoyan thinks that in the short term it is still going to be a period of adjustment.

But it's hard to recreate the crazy situation last year.

Analysts do not have a definite answer to whether the future pattern of cotton weakness has been formed.

Dong Shuzhi believes that it will not be apparent until May.

Because 4~5 month is a busy season for textile enterprises, since then enterprises have to prepare for summer clothing production, and this year's whole cotton consumption elasticity should be relatively large.

"Small and medium-sized enterprises are still in a wait-and-see condition. If textile enterprises have a demand for replenishment in 5~6 months, cotton prices may rebound again if demand arises."

Fu Xiaoyan believes that "shock down down below 28000 yuan is unlikely.

Cotton prices are expected to remain at a high level this year. After all, there is still a gap between supply and demand.

There is also some pressure to break through 30000 yuan upward, but if we can break through this barrier, the downward trend will change immediately.

For which price is the reasonable range of cotton, Wang Yong thinks, after all, with the increase of planting costs, it is very difficult for cotton to return to the previous low.