Cotton Prices Drop To Support Textile Stocks Performance

Wen Hua financial statistics show that since the beginning of this week, the cotton futures contract has fallen by over 5.50%, as of 10 days, closing at 13125 yuan / ton during the day. Under this background, more than 10 textile stocks have gained substantial gains on the 10 day. In addition, cotton and cotton belong to the textile raw material PTA, its futures prices rose sharply on the 10 day during the late trading day, closing at 6120 yuan / ton, 3.90% higher than the closing price of the previous day.

Internal and external factors push cotton prices down

According to industry analysis, Zheng cotton futures were mainly affected by short term reserve cotton prices. For example, on the day of the July 9th crash, the sales volume of the reserve cotton was 11930.0366 tons, and the actual turnover was 10010.5264 tons, with a turnover rate of 83.91%. The average transaction price was 12773 yuan / ton, down 259 yuan / ton compared with the previous trading day, and the price of 3128 yuan was 14015 yuan / ton, down 291 yuan / ton compared with the previous day.

Founder futures analyst Peng Bo said that since July, weather conditions in major cotton producing areas are generally better than expected. The weather in the Yangtze River Valley and Xinjiang is generally better than expected, which is conducive to cotton growth. The annual cotton output is expected to be flat and rebounded last year. In July 10th, 12 thousand tons of resources were delivered from cotton reserves, including 7 thousand and 200 tons of Xinjiang cotton. The transaction price is expected to continue to decline. Short term Zheng cotton futures will still fall, and the low probability of innovation will be larger.

In addition, the drag on the external market is also an important factor affecting the recent decline in cotton prices. As of July 10th, the US cotton futures index hit a minimum of 66.36 cents, and the price level was at a low level for nearly three years. Hou Yating, an analyst with Guoxin futures, said that the recent fall in US cotton prices was mainly due to favorable weather and good crop growth in the main producing areas of the United States.

Textile stocks are promising.

It is worth noting that, in the context of this week's cotton crash, due to the expected impact of cost reduction, A shares of textile and garment concept synchronous changes, more than 10 stocks rose. As of the 10 day closing, Phoenix Bamboo textile trading, China Textile shares trading, ST Gang rose 5.24%, Ruyi group rose 5.11%, and the bird 4.34%.

Huatai Securities analyst Zhang Qian said that by the downstream demand and the policy uncertainty of the dual impact of the first half of the textile and garment sector revenue end pressure, the main listed companies are expected to report half year growth in revenue between the central 5%-10%, net profit growth of the central hub between 5% -10%. Consumer demand is expected to gradually stabilize and pick up in the second half of this year, and industry performance is expected to improve. At present, the valuation of textile manufacturing sub sectors is near the lowest level since 2010. The macroeconomic disturbance factors will ease or bring about valuation repair, and improve the performance improvement of the downstream orders. The textile manufacturing sector is expected to usher in a phased market in the second half of the year. Zhang suggested that we should select quality companies with strong brand strength and high supply chain efficiency from bottom to top.

It is worth mentioning that cotton and cotton belong to the important raw material of PTA, and its futures price also rose sharply during the 10 day. As of 10, the PTA futures contract closed at 6120 yuan / ton, up 3.90% from the previous day's closing price.

It is understood that the two in the textile industry raw materials this commonality, cotton futures are mainly agricultural products, affected by the supply side is obvious, and PTA belongs to the petrochemical industry products, its price fluctuations more demand side leading. The two are also affected by the downstream textile industry.