In October, the cotton purchasing enterprises in Xinjiang began to scale one after another. Due to the decrease in the number of baling factories, the expected rush to harvest did not appear. The purchase price decreased slightly, and the main contract of Zheng Cotton 1901 fell to 15260 yuan/ton. Although the current pressure above the larger, but below the consumption is still supported, Zheng cotton will continue to shock trend in the near future, the decline is relatively limited.
The backward movement pressure of the warehouse receipt still exists
Zhengmian 1809 contract has completed all delivery procedures. According to the data released by Zhengzhou Commodity Exchange, since entering the delivery month, the total cancellation of Zhengmian warehouse orders 527, 175 effective forecast canceled, a total of 702, accounting for 6.14% of the market has generated warehouse orders. In other words, more than 93% of the warehouse receipt did not leave the market. By October 15, the Zhengzhou Commodity Exchange had accumulated 9,592 warehouse orders, equivalent to 383,680 tons.
The main reason why these warehouse receipts can continue to circulate is the widening of the price difference between the previous 1809 contract and the 1901 contract. From the current warehouse receipt structure analysis, since August 1st, the warehouse receipt of 2017/18 has started to discount, which makes the warehouse receipt holder more willing to sell the ground cotton and Xinjiang cotton with low and good premium in the form of point price on the 1809 contract. For the Xinjiang cotton with high premium, the premium and profit can cover 9-1 warehouse holding cost. The warehouse receipt holder is more willing to sell at the marked price of the 1901 contract.
Zheng Cotton 1901 contract is not just the pressure of the old warehouse bill. According to the survey in Xinjiang, the production increase in Xinjiang in 2018/19 is basically a foregone conclusion, with the output of about 5.2-5.4 million tons. In order to ensure the smooth registration of new cotton warehouse in Xinjiang, Zhengzhou Commodity Exchange has relaxed the requirements for registered warehouse in Xinjiang while adding delivery warehouses in Xinjiang. This makes the pressure of the new warehouse receipt in 2018/19 can not be underestimated. The pressure of the new and old warehouse receipt will be reflected in the Zhengmian 1901 contract, and the pressure of Zhengmian real offer is heavy.
Supply and demand report positive gap as expected
On October 12, the USDA released its monthly Supply and Demand forecast report for October, raising the 2018/19 US regional production estimate for the second month in a row to 4.303 million tons, while the global production estimate was lowered by 68,000 tons to 26.488 million tons. Global consumption estimates for 2018/19 have been cut by 40,000 tonnes to 27.816 million tonnes, while the supply-demand gap is forecast to widen by 28,000 tonnes to 1.328 million tonnes. Global ending stocks for 2018/19 were revised down by 657,000 tonnes to 16.209 million tonnes, driven by a sharp decline in regional ending stocks estimates for India. The region excluding China oversupplied by 1.938 million tonnes in 2018/19, down 28,000 tonnes from the previous month's estimate. Therefore, it can be seen from the above data that the global supply and demand gap mainly comes from China, while the regions outside China are still in the stage of oversupply.
Although there is a gap between supply and demand in the domestic market, macro-control will continue to exist in the market. According TO HISTORICAL DATA, WE CAN SEE THAT our country HAS been in demand exceeds supply for many YEARS continuously, and make up the gap between supply and demand is to rely on reserve cotton. After the continuous release of reserve cotton, the country's cotton reserve inventory has been reduced to near the safety margin. At the same time, in 2019/20, the region may gradually implement cotton subsidies to the mainland, and combine various macro-control measures to avoid drastic changes in cotton prices in China that will cause harm to the real economy. Zheng cotton market supply and demand gap is not expected to be clear.
Below by consumption support low prices have bought
Although the pressure is larger, but Zheng Mian below the support is also very strong. Cotton yarn inventory continues to decline. According to data from Huarui Information, cotton yarn inventory of textile enterprises has declined for two consecutive months from August 3 to September 21. At the same time, the profits of spinning enterprises are also considerable. Due to the high price of imported cotton yarn, the impact on the domestic cotton yarn market is weakened. Due to the gradual increase of PTA price, the prices of polyester staple fiber and viscose staple fiber are also rising, which further supports the price and consumption of domestic cotton yarn.
From the operating rate survey, we can see that this year, the spinning enterprises are facing the situation is not light season, take the textile enterprises in Henan as an example, large textile enterprises can basically ensure the full load of work, promote the consumption of domestic cotton.
It can be clearly seen from the outflow rate of warehouse receipt in the futures market that at present, the main 1901 contract price of Zhengmian is around 15,500 yuan/ton, the point price is positive, the outflow rate of warehouse receipt is accelerated, and the transaction volume is large, which indicates the vigorous downstream consumption.
Long - short factors intertwined with Zheng cotton difficult bull market
From the current data can be seen, as of the end of September, the domestic cotton social inventory of a total of 2,503,900 tons. At the end of October, new cotton will be a large number of market, social supply is increased again, and for the current domestic monthly consumption of 750,000 tons, before the new flower market, there is no supply and demand gap. At the same time, according to Xinjiang production survey data, Xinjiang region is likely to increase production in the New Year, although the consumption data is considerable, but Zheng Mian still needs time to digest the current inventory. To sum up, it is still too early to expect Zheng Mian bull market under the background of solid pressure and consumption support. The overall macro instability is also a big pressure faced by commodities. Zheng Mian will continue to maintain a volatile trend, with time for space.