On the evening of November 10, the dollar index jumped to a new high this year, although the main force of US cotton rushed up 120.7 cents quickly fell back to close down, the opening of the double eleven discount, how will cotton prices go in the future? On the afternoon of November 9, hedging research and investment released a survey questionnaire in the China Cotton Elite Club, mainly for the future of a domestic and foreign cotton price forecast, the core concerns of the market and the expectation of extending the dumping market to do online research, that night, The second batch of central reserve cotton in 2021 was released from November 10, 2021 to release 600,000 tons, and the new dumping and storage landed. At the same time, in the early morning of November 10, the US Department of Agriculture (USDA) released the November global cotton balance sheet, combined with the latest data to sort out the future cotton price direction.
1
Global cotton balance sheet: The library-to-sales ratio was cut by 1 percentage point to 70% in November, and the overall neutrality is more
Global cotton opening stocks for 2021/2022 were revised down by 220,000 tonnes to 19.44 million tonnes and total production was revised up 330,000 tonnes to 26.52 million tonnes from the previous month, of which Brazilian cotton production was raised by 150,000 to 2.87 million tonnes, Australian production by 130,000 tonnes to 1.15 million tonnes, total consumption by 150,000 tonnes to 27.02 million tonnes, and ending stocks by 40,000 tonnes to 19.83 million tonnes. Overall in line with the expectations of the more than one.
2
China's cotton balance sheet: No adjustment was made in November, and the cotton price survey of 21,000-20,0003 accounted for more than half
The USDA's November report did not adjust the balance sheet of Chinese cotton, but an online survey before the report was released showed that the overall divergence was quite different in predicting the price of the Zhengmian 01 contract in the coming month. The total estimate is that the cotton price is down to less than 16,000 yuan / ton and up to 30,000 yuan / ton or more, and the main reason for the divergence is mostly the expectation of Chinese cotton consumption, including the subsequent digestion of domestic high-priced new cotton.
The data shows that the most mainstream choices believe that the proportion of 21001-22000 yuan / ton is 28%, followed by the range of 22001-23000 yuan / ton accounting for 25%, the total of the two intervals accounts for 53%, and then the range of 23001-34000 yuan / ton accounts for 17%.
Source: China Cotton Elite Club, Hedging Research and Investment, online survey time 2021.11.9-11.10, a total of 166 samples were collected
On the evening of November 9, China Cotton Reserve released the second batch of 2021 central reserve cotton to release 600,000 tons from November 10, 2021, which coincides with the current USDA's gap of 600,000 tons of China's cotton imports, is it a coincidence? Online surveys before the release of the policy show that if the dump is extended, 52% believe that cotton prices remain oscillating, 29% think that it will fall first and then rise, and 19% think that it will rise first and then fall.
The formula in the latest announcement detailed rules mentions that the import reserve cotton is consistent with the previous Xinjiang cotton calculation formula, and the market sees signs of imported cotton. At present, there is no accurate value of imported cotton reserves on the market, but the market estimates that the total reserve is about 2 million tons, superimposed on the internal and external cotton, and the futures disk has more profits in the far month, so there is a belief that the reserves are thrown out to solve the situation that textile enterprises need to be forced to use high-priced Xinjiang cotton, and then go to buy cheap foreign cotton in the far month.
From this policy implications:
1. For the ginning mill that has just acquired a large number of high-priced new cotton with a cost of between 23,000 and 20,000, the pressure is huge, and the follow-up will also enter the game of ginning plants and textile factories. The policy balance seems to be tilted in favor of textile mills.
2, for the market if the new 600,000 tons are traded, increase the spot supply, this year has been traded reserves of 1 million tons, the original policy is to end at the end of November, but at present if you sell 600,000 tons, the reserve dump or will continue to December 2021.
3, in short, for cotton prices is the supply increase has short-term pressure, the middle line to see the original has not much reserve inventory thrown out, this year's procurement of foreign cotton is expected to be more certain, but also does not rule out the acquisition of Xinjiang cotton new cotton, so the middle line under the stability of domestic consumption, Zheng Mianwei is expected to hold the range oscillation.
3
Global balance sheet except China: the ratio of library to sales fell to 0.7 percentage points to 60% month-on-month, which is more than the overall
1. The USDA's November report did not adjust the balance sheet for cotton outside china:
November adjusted the 2021/2022 cotton opening stocks by 220,000 tons to 106,900 tons, the total output by 330,000 tons to 20.69 million tons, the consumption by 150,000 tons to 18.31 million tons, and the ending stocks by 40,000 tons to 10.99 million tons. The overall forecast is more than the global balance sheet.
However, online research before the release of the report shows that the overall divergence is also large in predicting the price of the US cotton 03 contract in the next month. The total estimate is that U.S. cotton is down to below 70 cents/lb and up to 170 cents/lb or more, and the main divergence in the market is the difference in global cotton consumption this year and the amount of cotton purchased by China except China. The data shows that the most mainstream selection is 36% in the 111-120 cents/lb, followed by the range of 121-130 cents/lb at 22%, the two ranges account for 58%, and the range of 101-110 cents/lb is 16%.
2, the U.S. cotton balance sheet: November report is slightly bearish, December reported U.S. cotton exports or upward adjustment
USDA in November raised U.S. cotton production by 40,000 tons to 3.96 million tons, slightly deviated from expectations, the November report only measured China's reserve dumping by the end of November, so this report did not reflect, China's new second round of dumping 600,000 tons of expectations, is expected to be reflected in the December supply and demand monthly report, but China may also consider Brazilian cotton or Indian cotton, but it is unlikely to see the recent progress of India's new cotton listing.
3. India's cotton balance sheet: November estimates for 2020/2021 cotton consumption are raised by 170,000 tons to 5.44 million tons
India's cotton consumption for 2020/2021 was expected to rise by 170,000 tonnes to 5.44 million tonnes in November, with consumption up 70,000 tonnes to 5.62 million tonnes in the current year, resulting in a 240,000 mt to 2.47 million mt cut at the end of the year. The overall balance sheet is on the more.
India's new cotton listing is slower or affect its export progress: as of the end of October 2021/2022 India's new cotton cumulative listing of 5.069 million bales, 52% less than the same period last year, CCI has not yet started to acquire, even if there is a price advantage for U.S. cotton, but the current listing progress or affect its export progress, while this year's total production of Indian cotton is expected to be the same as last year to 6.1 million tons, this listing progress is doubtful, the probability of subsequent downward production estimates is large, and the support for Indian cotton prices is stronger.
4 Summary: The core of future cotton prices will focus on Chinese consumption and U.S. cotton exports
In summary, the USDA's November Global Cotton Supply and Demand Report lowered its global cotton ending stock estimates to overshadow the impact of a slight increase in U.S. cotton production, and the overall report was neutral. Global data slightly more, global opening inventory reduction and production increase to offset the global consumption upward adjustment, the U.S. cotton balance sheet due to the slightly empty output adjustment, the Indian balance sheet as a whole is more, due to the increase in the previous year's cotton consumption, the new year's listing slow production estimates are in doubt, China's second round of dumping policy landed, if China's domestic consumption is stable, the government replenishment reserves continue to purchase cotton in addition to China is expected to strengthen or will support global cotton prices to rush higher again. Follow-up attention to the adverse impact of the epidemic on global consumption and macroeconomic regulation and control policies.
At present, the global cotton price seems to have reached a high level of nearly a decade, what to pay attention to in the future? The latest online research results show that the most concerned is China's consumption and U.S. cotton exports, China's purchase of U.S. cotton accounted for 49% respectively, followed by the new quota of the policy and the auction of imported cotton accounted for 43%, followed by the policy reserve dump accounted for 42%, then the focus on China's downstream raw materials and finished product inventory accounted for 40%, and the concern about Sino-US relations accounted for 37%.
Attached: USDA Global Cotton Supply and Demand Balance (November 2021)
This article originated from hedging research and investment