Cotton Market: 2016 Is Still In A Weak Position

At this stage, the cotton market is still in a weak position.

Sexual performance.

On the one hand, the supply of cotton has been declining year after year due to the reduction of cotton planting area.

On the other hand, supply is sufficient because of the continuous storage and storage of stocks, and the above height should not be overly optimistic. The cotton market needs to change its space with time.

Adequate supply of potential national reserves

In 2014/2015, the total supply of cotton in China was about 20 million 800 thousand tons, and consumption was about 7 million 200 thousand tons. The supply exceeded demand, and the stock continued to accumulate to 14 million 800 thousand tons.

In 2015, the supply declined to 20 million 100 thousand tons due to the decline in production, and the demand dropped to 7 million 130 thousand tons, and the stock dropped to 14 million 170 thousand tons, but it remained at a high level.

Among them, the supply includes national cotton, new cotton and imported cotton.

Carry inventory in hand.

As of the end of 2015, the stock of national cotton reserves is still around 10 million 150 thousand tons, which can be said to occupy half of the supply. This part is actually not able to circulate freely in the market, and it is necessary for relevant departments to throw and store in order to form effective supply, so we define this as potential pressure.

In 2015, the quantity of imported cotton was limited by the quantity of quotas, and the supply was limited. The responsible person of the NDRC said that in 2016, the import of cotton was strictly controlled, and the import quotas within the tariff were still limited to the bottom line of 894 thousand tons of WTO.

The stock of cotton in the hands of cotton companies is still low in the background of the market.

In terms of production and demand this year alone, the total domestic cotton demand is around 7 million 130 thousand tons, and the supply of 5 million 300 thousand tons of new cotton plus 890 thousand tons of import quotas still has a shortfall of about 900 thousand tons.

Moreover, the high temperature of more than 20 days last July to August affected the quality of new cotton, resulting in problems such as short fiber and high horse value, resulting in high quality.

Relatively scarce, it is not ruled out that in the near future, after the new cotton market has been concentrated, with the reduction of cotton sources, there will be a certain rebound in the market before the sale of national cotton and cotton, but it will still not go up because the market is expected to sell the national cotton stores in March this year.

The impact of cotton yarn imports is still on the way.

The impact of imported cotton decreased significantly in 2015, but imported yarn still suppressed domestic cotton market.

With the widening of the internal and external spreads, international cotton prices are no longer dominant, and 1% tariff imports still have advantages, but the quota is limited.

Therefore, the number of cotton imports has been shrinking in 2015, and the amount of cotton imports in the first 10 months is only 1 million 200 thousand tons, far below the 2 million 80 thousand tons level in the same period in 2014.

In 2016, China adopted strict control measures on cotton imports. The import quota of cotton within the tariff remained the minimum level of 894 thousand tons stipulated by WTO, and cotton imports had little impact on the domestic market.

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The cost of planting cotton is supported at the bottom, but because of the potential sale and weak demand of cotton, the uplink of cotton prices still seems to be incapable of falling into a dilemma, and the volume and position of the cotton prices are sluggish.

On the operation, the possibility of unilateral market in the cotton market is not large, and the overall operation is mainly between 10500 - 14500 yuan / ton.

On the time node, the market pressure is small before March, and the pressure of throwing and storing will increase. The market will still need to be explored. With the expected shrinkage of cotton planting in the new year of 4 and May, the cotton price will be expected to rise gradually after bottoming.

1701 after the listing of the contract, we may consider buying 1605 to sell 1701, and we will pay attention to the direction of change in March.

In March, if the storage is expected to be realized, we can buy 1701 to sell 1605 or 1609.

In the cotton market, it is difficult to find trend trading opportunities during the year. In this case, it is suggested that the textile enterprises should take the purchase and purchase as the main purpose. Based on the fact that the cotton price rises effectively, but the frequency of the rising bands can be judged, the cotton enterprises can appropriately bargain for the long term contracts at the bottom of 11500 yuan / ton.

In the first half of the year, once trading arbitrage opportunities appear, it is suggested that trade enterprises sell 1605 contracts.