Cotton production is expected to be significantly reduced or cotton prices are now rising

In the second quarter of this year, Zhengzhou cotton futures prices rose by nearly 50%. Data show that as of June 30, the main contract of cotton futures 1701 closed at 14,725 yuan per ton. Industry analysts said that the rapid rise in cotton prices is on the one hand a decrease of about 10% in the national cotton planting area in 2016. This year, the national cotton output is expected to decrease sharply, and on the other hand, the rebound in the export of the textile industry is expected to improve upstream The cotton industry brought a strong boost, which made the cotton market driven by the improvement of supply and demand fundamentals.

It is understood that since the end of 2014, cotton production has started to decline. Due to natural disasters, this year's cotton output may only be about 4.3 million to 4.5 million tons. In terms of imports, the country also began to control the number of imports from the end of 2014 when the collection and storage ended, mainly to reduce the issuance of import quotas. Monthly imports have reached historical lows this year.

Previously, the market was generally expected to start selling cotton in March. Industry insiders said that if the dumping of deposits in March is realized, the market may still fall, and the market price of cotton may be lower than the reserve. Because the situation was similar last year, one million tons was dumped in July last year, and the actual turnover was about 63,000 tons. However, the actual dumping of reserves was postponed to May, which greatly exceeded market expectations. During the two months, the consumption of commercial inventory increased.

Analysts point out that the current commercial cotton inventory is relatively low, and the current cotton price is rising. At present, it is necessary to pay attention to whether downstream mills can withstand the pressure brought by the rising cotton prices. Next, they will enter the deep off-season of the cotton market. The hype of the weather in this period and the specific degree of impact on production. And how strong the driving force of the September consumer season is. At present Zheng Zheng's warehouse receipts are close to 40,000 tons. If the futures price gap is too large, more cash will surely enter the delivery.

Another hot spot that the market is paying attention to recently is cotton area and recent weather. Relevant monitoring data show that cotton sown area has decreased significantly in 2016, with a national decrease of 14.3%, and the decrease in areas other than Xinjiang is generally more than 20%. Xinjiang has a large subsidy and a target price of 18600 yuan / ton. The decrease in planting area was small, at 6.3%. Regardless of the impact of state reserve cotton, cotton supply in 2016 will be in short supply, which will provide certain support for cotton prices.

In addition, the recent high temperature and hail in Xinjiang have affected yields, and the market capital has taken the opportunity to speculate. However, the market predicts that the reduction in yields caused by weather is expected to be relatively limited, and the impact on output will not exceed 400,000 tons. It began to dump reserves on March 1, 2017. 50,000 tons / day, 400,000 tons is about 8 days of dumping reserves. If the current production reduction considers the dumping of reserves in the new year, it will not affect the supply and demand pattern of the new year, and the overall supply and demand pattern of the new year is still empty. Therefore, the price caused by the hype weather is very limited.

However, in the face of the current cotton price trend, the market is also divided. Some people believe that the reason why the domestic cotton has risen has something to do with the rhythm of the state reserve cotton dumping. As long as the state reserve increases its cotton input, cotton prices will plummet. In this regard, some analysts said that for the current main contract cotton prices should be viewed dynamically, first of all, the September contract price under the hype of topics such as warehouse receipts, the price premium is larger.

It is worth noting that the current cotton procurement of textile companies is active, and the raw material inventory of textile companies is still relatively low. In order to maintain production, inventory needs to be continuously replenished, but the cotton resources in the spot market are lacking. positive.

Analysts said that the cotton price continued to be strong, the dumping of reserves was slow, the transaction remained high, the price kept rising, giving positive feedback to the market, foreign cotton sources were tight, and the weather in the growing season was easy to rise. In this case, the cotton theme was still positive. In addition, coupled with the promotion of funds, the market as a whole is still operating well, but there may be a need to organize after the continuous rise.

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