National Storage Extension Time To Suppress Cotton Prices Upward

In the first half of this year, the Zhengzhou commodity exchange

Futures performance is eye-catching, so far the cumulative increase of nearly 30%, reaching a maximum of 16185 yuan per ton.

But recently, the main contract price of zhengmian futures has weakened, and the cumulative decline in nearly 4 trading days is over 6%.

Insiders said that the fall of Zheng cotton's price was mainly affected.

There is a large uncertainty in the market outlook, and the short-term performance is shock adjustment.

Cotton prices have been surging forward and high in the past due to the shortage of cotton and the increasing demand of enterprises in China.

At this point, the relevant departments decided to orderly digest the state reserve cotton inventory, from May onwards for 3 months of the national cotton reserve policy.

However, due to the constraints of the progress of public inspection and the progress of export, the amount of access to circulation is very small. Insufficient supply and rigid demand have prompted the downstream enterprises to compete actively, leading to a rapid rise in the price of Zhengtian cotton.

In July 28th, the development and Reform Commission held a meeting of the reserve cotton rotation and decided to extend the sale time of the cotton reserves for one month.

As a result of this news, Zheng cotton price fell continuously.

Galaxy futures analyst Liu Qiannan said

Under the anticipation of insufficient supply, the enthusiasm of the downstream enterprises has been stocking up, which is affected by the high pressure of cotton prices. Even if the downstream enterprises have reduced production, they will have to "reluctantly" purchase under the drive of ensuring the normal production purpose.

When the storage time is postponed, the purchase of cotton by the downstream factories gradually tends to be "calm", and the enthusiasm for bidding is also weakened.

From May to August each year, China's cotton supply is out of date. The growth of new cotton and the digestion of old cotton make the market's cotton supply and demand mismatch.

"Downstream current spot purchases mainly rely on the national cotton reserves, and the spot market is less."

Liu Qiannan believes that in addition, the main cotton producing areas in Xinjiang, July and August for cotton production an important period, from now on the cotton production in the area is good, though hail weather, but the total production area of cotton production has little effect, if do not encounter extreme weather, this year is expected to increase production.

In June 2016, the purchasing managers index (PMI) of China's cotton textile industry was 47%, down 8.7 percentage points from last month, and fell to below 50% withered line.

For the downstream demand, Huatai futures believes that there is a better trend in the latter part of the downstream market. The price of raw materials will decline, and the price advantage will be more obvious than that of the outer yarn. In a month, it will enter the traditional peak season of gold nine silver ten, so the new orders, production volume and start-up rate are expected to rise.

However, founder futures futures researcher Wang Yuhong said that the main factor in the current cotton price trend is the national policy factor. Although the delay in throwing storage time will be bad, the cotton price will rise, but there is no clear provision for throwing reserves. If the latter remains 30 thousand tons per day, the growth price of the cotton price will be limited.

Insiders pointed out that in August, when the news of dumping and storage was postponed for a month, the short term domestic cotton market would maintain a weak pattern, but the downlink space was also limited.