In the most recent month, Zheng cotton fell sharply, falling more than 10%, and spot prices also fell, but the margin was relatively small. From the perspective of downstream demand, domestic demand is acceptable and external demand is weak. The downstream yarn prices have remained stable and difficult to rise. Downstream demand is difficult to start is the most important reason for cotton prices difficult to recover.

The 2011/2012 cotton year is the year in which the world's production exceeds sales, with output of 27 million tons, consumption of 23 million tons and inventory of 13 million tons. According to USDA's forecast data, this oversupply situation will continue into the 2012/2013 cotton year. Despite the fact that, from the perspective of planting area, global cotton production has declined and consumption has rebounded, the ending stocks are still increasing. Therefore, the overall cotton price trend in the past two years is weak.

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The Zheng Zheng cotton slump was mainly caused by the import quota of 1 million tons. China's high cotton purchasing and storage prices have led to a difference in cotton prices at home and abroad, and the price of cotton yarn has increased in comparison with previous years. The previous year's cotton import volume was 2.58 million tons. It is estimated that the annual cotton imports will reach 4.2 million tons, and China's ending stocks may reach 5 million tons. The US Cotton Export Weekly report shows that China's textile mills and traders have signed 1.35 million tons of US cotton. In the coming months, nearly 500,000 tons of US cotton will come to Hong Kong in succession. The pressure on the stock in the port bonded area is quite large. The total amount of imported Australian cotton this year is equal to the sum of Australian cotton production in the past five years.

We believe that imported cotton resources will be the main raw material for textile companies in the next two months under the current state of cotton price difference. However, with the reduction of imported cotton resources in the spot market and the increase in the prices of black market import quotas, the textile consumer will gradually turn to domestic cotton. This will drive the cotton spot price index to form the bottom.

After June, the market’s focus will be on the production forecast for the new cotton year. The data show that the highest labor cost is for cotton cultivation, so the national cotton acreage for this year is reduced by about 10%. In 2012, based on the reduction in average yield and area, China's output is expected to be 6.55 million tons. Although the government announced the new year's purchase price of RMB 20,400/ton, it eased the market's concern about the sharp drop in cotton planting area. However, in the long term, it is difficult to reverse the trend of planting intentions. Cotton ** does not rule out the speculation surrounding the weather in July and August.

Global cotton consumption will determine the long-term trend of Zheng cotton. Looking at the next year, cotton consumption is expected to remain stable, and yarn production is expected to increase slightly. According to the export data of 2010 and 2011, the export ratio of cotton products has a downward trend, which undoubtedly affects the total cotton consumption of domestic textile companies. In 2011, the cotton consumption was 8.9 million tons, a decrease of about 9% from the previous year. In 2012, the growth rate of China's yarns in the first five months was less than 3% (about 2.8%), and in 2011 it was about 20%. With the recent macroeconomic fluctuations, orders for cotton products from Europe and the United States have decreased, and many textile companies have suffered losses.

Therefore, this year's cotton consumption will definitely decrease. If we say that the global economy will bottom out in the third quarter in 2012, the cotton price in the coming year will also be relatively stable. According to our survey of more than a hundred textile companies, the operating rate of large textile companies is significantly better than that of small and medium-sized textile companies, but the overall use of cotton is declining.

The inventory of cotton in large, medium, and small-sized textile companies varies greatly. Some large companies have months of cotton stocks, many textile companies are low-cotton stocks of high-cotton cloth, and the impulse of companies to destock will inevitably affect future cotton procurement. Progress will continue with the purchase of cotton. Before the cotton market has formed a trend of rising, consumers will postpone the library.

Recently, the trend of Zheng Cotton was weak, and the negative factors were reflected in the expected export of State Reserve Cotton. Affected by this, both domestic cotton prices and spot prices fell under pressure. After the negative factors are gradually digested, after September of this year, the cotton market will begin to enter the new year's pricing cycle for storage and storage. The price of domestic new cotton will fluctuate centered on the price of storage and storage, and market prices and policy prices will have the opportunity to gradually converge.

However, the running space of cotton prices will shrink dramatically compared with previous years. The past two years are an obvious policy city. Zheng cotton price volatility essentially starts with different policy expectations. In the international market, whether it is China's policy or India's policy, the impact on cotton prices is unusually outstanding, and government regulation is aimed at maintaining stability. We believe that Zheng Cotton may have begun to build the bottom, and there will be a rebound in the coming months.

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