Poor consumption of cotton bottom oscillation

The new year's collection and storage limit the space under the cotton price, and support the cotton price from the long-term trend to the closing price. However, due to sluggish consumption and high inventory, Zheng cotton 1301 contract will continue to maintain the interval 18600-19800 interval oscillation.

The cotton main contract 1301 was boosted by factors such as the improvement of the macro situation and the rise of the US cotton in the short term. Backed by the support of the low price of 18,600 yuan/ton, there was a rapid rebound in the support. From the perspective of the recent fundamentals, the situation of textile enterprises still weighs on the consumption of cotton, and domestic cotton stocks increase at a high rate. Zheng’s 1301 contract is likely to continue to maintain its bottom oscillation in the absence of volume and price. .

The situation of textile enterprises has not improved and the downstream consumption is worrying

Domestic textile and apparel export and domestic sales data are not optimistic. In terms of exports, the growth rate of textile and apparel exports from January to June was only 1.63% year-on-year, which was a decrease of 0.43 percentage points from January to May. And from the ring data, textile exports reached US$8.408 billion, a decrease of 8.88% from the previous quarter. In terms of domestic sales, the total retail sales growth of the textile and clothing industry from January to June was 16.9%, which was also significantly lower than the growth rate of 24.6% in the same period of last year. At present, the bad domestic textile situation has brought great uncertainties to downstream cotton consumption.

Although domestic apparel will enter the traditional peak season in August, the enthusiasm of the textile enterprises for raw material procurement will increase. However, the current global economic situation has not yet recovered, the macroeconomic uncertainty still exists, and domestic apparel manufacturers' orders are not optimistic. In addition, the status quo of the textile enterprises that have stopped production or restricted production will lead to more difficulties for SMEs to be eliminated. This shows that the downstream consumption of cotton in the second half of the year is still causing market concerns.

Import shocks, high inventory or restricted cotton prices

According to data from the National Bureau of Statistics, China imported 476,000 tons of cotton in June, an increase of 296.6% year-on-year. In the first half of 2012, a total of 3.055 million tons of imported cotton were imported, a year-on-year increase of 130.2%. As the price difference between domestic and foreign cotton continued to maintain a relatively high level, China’s cotton imports continued to remain high in June, although it slightly decreased compared with the previous months, but it increased nearly threefold year-on-year, and the annual import volume reached a record high. According to a survey conducted by China Cotton Information Network, the proportion of cotton inventories of textile enterprises in the past three months has continued to hover around 50%, and the proportion of cotton in some textile companies has already exceeded 50%, reaching 5% or even 100%. Currently, due to the restrictions imposed by the domestic cotton quota allocation, the large domestic and foreign cotton price gaps have not brought too much impact on the domestic cotton market. However, the phenomenon of domestic cotton import in the major ports is an indisputable fact. Once the quota is increased in the later period, it is cheap. Imported cotton will certainly take over the consumer market of domestic Khmer prices.

With the increase in import and storage of cotton, China's cotton stocks have almost tripled to 6 million tons. Therefore, how to digest inventory in the later period will also be an important factor affecting the price of cotton.

The reserve policy is underpinned, and short-term or reserve deposit

China Storage Cotton has repeatedly emphasized that it will begin in September and open an unlimited amount of storage at 20,400 yuan/ton. The implementation of purchasing and storage policies will surely give iron prices support. It is expected that the cash price of spot cotton will continue to rise during the new year's purchase and storage policy, and it will move closer to the purchase price.

Before the start of the State Reserve Collection and Storage in September, there are also possible short-term deposits. Although the country generally puts out storage in the event of a supply shortage, or throws storage in order to control the rising spot price. At present, the domestic cotton market completely fails to meet the above two conditions for throwing storage. However, the new policy of continuously opening up an unlimited amount of storage and storage will exert tremendous pressure on the domestic storage capacity. Therefore, it is not ruled out that the state will carry out a certain amount of stockpiling during the August-September period by means of a round bank. The quantity and price of the dumped stock will affect the fluctuation of the cotton price.

Taken together, the new year's collection and storage limit the space under the cotton price, and will support the cotton price from the long-term trend to the closing price. However, due to sluggish consumption and high inventory, the short-term rebound in cotton prices still lacks strong support, and it is also possible that stocks under pressure from high stocks will be high. Zheng’s 1301 contract may continue to maintain its 18600- to 19800-range oscillation in the short term.