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Cotton Rebound Is Not Sustainable

2011/9/16 13:51:00 33

In September 8, 2011, the 2011 new cotton purchase and storage in China were carried out on schedule. Domestic and foreign cotton markets responded positively. The main contract volume was higher on the same day, and the market was much more vocal.

Fundamental analysis

The International Cotton Advisory Committee (ICAC) September global production and inventory report shows that in 2011/2012, the world's cotton production will reach 26 million 910 thousand tons, an increase of 8.2% over the previous year, and consumption of 24 million 720 thousand tons, an increase of 1.4% over the previous year; the end of the stock will reach 11 million 240 thousand tons, an increase of 24% over the previous year.

The keynote of cotton fundamentals in the new year is oversupply.

The recent cotton market is more concerned about flood in Pakistan.

According to media reports, the flood is expected to cause the country.

cotton

The reduction in production is about 420 thousand tons, but this is not quite comparable to the global cotton consumption of 24 million 720 thousand tons.

From the domestic situation, by comparing the data of various channels, we have taken China's cotton production in 2011/2012 for 7 million 800 thousand tons, 9 million 700 thousand tons of consumption, 3 million 200 thousand tons of imports, 2 million 400 thousand tons of storage and 2 million tons of storage and storage. Therefore, the supply of cotton in China this year is 13 million 400 thousand tons, and the demand is 11 million 700 thousand tons, which is still oversupply.

Analysis of purchase and storage

The current market divergence is mainly due to the increase in labor costs and planting costs, and the new year.

Cotton price

It will be significantly higher than the previous year; on the other hand, the high cotton price has led to a significant increase in cotton growers' planting enthusiasm, and no obvious disastrous weather has been produced during the cotton growing period. The cotton production in the new year has become a reality, but the price will ultimately be determined by the market supply and demand.

We can predict the cotton spot market's support from around 18400 yuan / ton based on the estimated cost of clothing, seed cotton and labor cost.

This price reasonably reflects the rising cost of planting, but because of the opposite pattern of cotton supply and demand this year, it is difficult for the latter market to form a pattern of inflation.

The main variable in the market is the total purchase amount of national cotton reserves.

Referring to the 2 million 720 thousand tons of storage and storage data in 2008, and the fact that it is open and unlimited, most people assume that the storage capacity will reach 3 million tons.

However, many people in the industry say that the state explicitly proposes to store imported cotton, so that the 3 million tons will be the sum of the state's collection and import of foreign goods.

Therefore, we have conservatively predicted that the national reserve cotton reserves will reach 2 million tons in the new year.

Currently in the early stage of the new flower market, the market

Cotton supply

Volume of seasonal supply shortages, coupled with the purchase and storage of start-up, so the market anticipate the pre supply and storage supply = the initial supply of new flowers listed - Cotton expected storage capacity; later, with the increase of new cotton listing, cotton supply will increase rapidly, and the specific amount of storage will be gradually determined.

As a result, the market will be in a more relaxed state of supply exceeding demand, and cotton prices will gradually decrease.

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Operation strategy

Combined with price, volume, time and space analysis, it is estimated that the cotton price will continue the current strong rebound.

Although cotton is in a relaxed pattern of oversupply, funds have higher enthusiasm for purchasing and storing.

As a result, the radical investors can get a small amount of intervention, and the CF1205 contract looks as high as 24500 yuan (the cotton price of the textile factory can accept the highest cost of cotton), and the trend investor can be short at about 25000 yuan.