Weather Impact Continues, Cotton Prices Remain Strong Shocks

In the middle of July, cotton prices remained strong and volatile. Since last week, Zheng Mian's main contract CF2009 broke through 12000 yuan / T, the long capital was eager to try and had a strong desire to rise. After a long and short battle, Zheng Mian finally rose to 12250 yuan / T high point, and then returned to the oscillation range. On Friday, the center of gravity of cotton futures rose steadily from last month's last day to 64 cents. Although the upward road is long, but the internal and external disk linkage rise, also for the textile industry to bring a silk of comfort.

After the US Department of agricultural supply and demand report released on Saturday, another strong support report was issued. In this month's forecast, USDA cut its global production forecast for 2020 / 21, as well as US exports and year-end inventory forecasts. The year-end inventory of cotton in 2020 / 21 is estimated to be 6.8 million bales, and that in June is estimated to be 8 million bales. The U.S. cotton production in 2020 / 21 is estimated to be 17.5 million bales, lower than the June estimate of 19.5 million bales. It is worth noting that the main reason for the reduction of US cotton production in this report is due to the drought in Dezhou area, and the report data is down. Market participants' expectation of the decline of US cotton production in the new year is further strengthened. In addition, the low cotton quality rate in Texas also further aggravates the worries of the industry.

Since July, drought has occurred in some areas of Xinjiang, and floods have been caused in some cotton planting areas of the Yangtze River Basin due to heavy rainfall, which has adverse effects on normal Bolling and topping of cotton. Market investors will be the recent adverse weather at home and abroad as the theme of speculation, to push up the price of cotton will be strong.

The author thinks that since June, the weather operation in the outer wall has lasted for a period of time, but according to the current domestic cotton planting area affected by the weather, the space of production decline is still relatively limited. In addition, although China has continued to overburden US cotton, but the number of subsequent orders can be signed? Whether the follow-up good support can continue or is the key. Therefore, it is suggested that investors should be cautious on the basis of short-term risk control. The upstream and downstream industries continue to de inventory, timely return funds, and stabilize operation.