Recently, Zheng Mian's main contract broke through the previous high. In order to reduce the risk of raw material costs, some downstream factories began to take holidays, and the willingness of yarn mills to purchase was low, and the goods were slow. With the Spring Festival approaching, replenishment companies have entered the final stage of taking goods, and the transaction of new orders is limited.
1. Market review
Internationally, U.S. cotton prices rose sharply last week, breaking through 85 cents, hitting a new high again, mainly affected by the Federal Reserve's monetary easing expectations and macro factors such as the stock market, but on Friday, affected by the sharp decline in weekly export data, prices fell sharply, and it is still necessary to continue to pay attention to U.S. cotton exports in the later period.
Recently, the market trend of the main ICE cotton contract
In mid-January, Zhengmian's main contract was consolidated for a period of time around 15,500. On January 18, Zheng Mian rose sharply, and took advantage of it to go to a higher level as a whole. However, in late January, cotton prices did not further expand the gains, but launched a shock on a new platform, and the trading axis moved up from 15,500 to 16,000 in the middle of the month.
Entering January, the improvement of textile enterprise orders led to a round of enterprise replenishment, although it is close to the Spring Festival holiday, the replenishment is basically completed, but the enterprise is optimistic about the market outlook, Zheng Mian performance is strong shock. However, under the effect of these positive factors, the increase in cotton prices is still relatively limited. Zheng Mian continued to fluctuate near the Wanliu mark, indicating that the game between the long and short sides in this position was fierce. Extrapolating from the cost of Xinjiang cotton, the current price has been close to the cost of new cotton in southern Xinjiang, and some enterprises with low acquisition and processing costs have hedging space. Therefore, at the key pressure level of Wanliu, Zheng Mian's main contract has repeatedly fluctuated.
Approaching the Chinese New Year, the operating rate of downstream textile enterprises is steadily declining. This year, most of the downstream cotton spinning enterprises have normal holidays, and a small number of enterprises with tight order delivery time will have an appropriate holiday time. In general, including textile enterprises and weaving enterprises raw material replenishment has been basically completed, continue to replenish a large number of enterprises are not much, basically cautious just need to replenish the warehouse. In the case of gradual weakening consumption, it is unlikely that cotton prices will continue to rise sharply. On January 31, the main contract of Zhengmian closed at 16,085 yuan/ton, down 15 yuan/ton from the previous day.
Recently, the market trend of Zhengmian 2405 main contract
Businesses began to take holidays one after another
As the New Year approaches, many textile enterprises have been on holiday, migrant workers have also begun to return to their hometowns, and the upstream and downstream have basically entered the end of the year. According to cotton trading enterprises in some areas, this week, the cotton enterprises and middlemen who have come to see the goods and placed orders have decreased significantly compared with mid-January, because a large proportion of small and medium-sized cotton textile mills have entered the pre-holiday state, and the inquiry and procurement of raw materials have gradually stopped (including port bonded cotton, cargo, etc.). Some cotton companies have also begun to reduce pending orders and quotations, waiting for the market to start after the year. At present, the market as a whole is still weak, the dilemma of insufficient demand in the industrial chain has not yet come out, and the sustainability of production orders is difficult to guarantee.
Generally speaking, there is often a small peak season before the Spring Festival, and the market also reflects that some foreign demand orders were indeed issued some time ago, and the demand for cotton procurement by weaving mills is improving. After a period of continuous replenishment, the raw material inventory of weaving mills has reached a high level, and the demand for cotton has weakened before the Spring Festival, but the overall situation is acceptable. The biggest concern of the market for the future market is still the sustainability of demand, after all, it is now the peak period of new cotton supply, the cotton supply is sufficient, and the recent imported cotton is also a continuous large number of Hong Kong, and the overall supply of cotton raw materials is abundant.
Is it still possible that cotton prices will rise after the holiday?
In January, due to the centralized stocking of the downstream of the textile market, the cotton yarn inventory of textile enterprises was significantly reduced, and the output profit improved, or provided potential space for subsequent cotton consumption. According to the research of relevant institutions, high-count yarn has been selling well since January, and the order schedule of some textile enterprises has been scheduled to March. Therefore, before the arrival of the "Golden Three" demand season, most of the industry is expected to improve the consumption of the downstream market, and it is expected that the cotton market demand may still increase after the Spring Festival, and the domestic cotton price may continue to be strong. In addition, some ginning enterprises high-cost cotton is still in a floating loss situation, temporarily difficult to flow into the market, in the short term will also provide support for the domestic cotton market.
Source: China Cotton Network, Huatai Futures, Baichuan Yingfu, New Century Futures, Futures Daily, China Yarn Network
Editor: China Yarn Network New Media Team
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