Cotton Market Will Usher In The "Pre Dawn Darkness" Follow-Up Market Will Be What Waves.

Since mid March, the main contract of ICE and Zheng cotton has been repeatedly detected and touched at the top of 55-58 cents / pound, 10100-10600 yuan / ton tank, and the amplitude of oscillation is narrowing.

Domestic cotton yarn, gray cloth and other downstream enterprises, orders and profits have taken the lead in the warmer. The production capacity of C40S, C21S and below cotton yarn has gradually picked up, and cotton spot has also stabilized. In the mainland, Henan, Shandong and other mainland regulatory libraries, the gross price quotations of 2128B2 and 2128C2 are 12200-12400 yuan / ton, 12000-12100 yuan / ton, some cotton enterprises are eager to ship the recycling funds, and the 2128C2 quotation is below 11900 yuan / ton.

In my opinion, domestic

We have reached the stage of "bottom up", "rebound" and "reverse". We need to be cautious and courageous in short selling. The reasons are as follows:

First, the ICE contract has a relatively limited downward space, and the floating space or open, the main contract will test the 60 cents / pound pass.

Although USDA expects us cotton planting area to increase in 2016/17, the global cotton planting area is dropping more sharply.

With the policy of China's cotton reserves coming out, the impact on the US cotton export contract is very small.

As of March 17th, the US cotton has been contracted out for 1 million 614 thousand tons in 2015/16, accounting for 81% of USAD's annual export volume, and the pressure of ICE futures warehouse receipts is relatively low. Once the situation is clear, the difficulty of capital market speculation is not large. Therefore, according to the relevant person in charge of the development and Reform Commission, the reserve cotton price will be referenced to Cotlook A index, both inside and outside.

There is little hope of a falling resonance.

Two, the Fed's interest rate hike is postponed, and commodity rebound is expected to continue.

With the central banks' printing money one after another, the rebound of commodities will come to an end. The cotton with strong financial nature can not be ignored. After the last two quarters of last year, the price of commodities has fallen by 14% and 11%, and commodity prices may be bottoming out.

Oil prices and copper prices rebounded from the lows they hit in January and February. Barclays expects net inflows of commodities to exceed $20 billion in the first two months of this year, the strongest year in 2011.

Three, global,

Cotton consumption has passed through a difficult period, showing recovery.

According to USDA's latest monthly report, although China's cotton consumption in the 2015/16 year has dropped by about 200 thousand tons over the year of 2014/15, the demand for Vietnam, Bangladesh, Turkey and other Southeast Asian countries has increased significantly.

Recently, China's cotton textile provinces feedback, because the impact of external yarn greatly weakened, domestic cotton prices have been almost the same as foreign cotton, textile enterprises profits rebounded significantly, so not only small and medium cotton mill increased C40S and below the number of cotton yarn production, some big factories also timely adjust product structure, C40S, C32S yarn and polyester cotton blended, cotton viscose blended yarn proportion rising.

Some manufacturers said that the supply of raw materials for spinning C32S and C21S yarns is adequate, and that the price of low quality cotton will decline again, and the competitiveness of China's cotton yarn and grey cloth export will be raised.

Four, the import of low count yarn has become the end of the battle. It will take time for the high count yarn to open the Chinese market.

In February 2016, the total export volume of India yarn was 158 thousand tons (of which cotton yarn was 139 thousand and 300 tons), which increased by 22.8% compared with the same period last year, and China's imports accounted for 27.4%, down 1.3% compared with the same period last year. China, Bangladesh and Egypt were the top three cotton yarn importers, accounting for 57% of the total export volume of India cotton yarn. The competitiveness of Xinjiang's cotton yarn has been rising continuously due to big subsidies and preferential policies. The competitiveness of real cotton yarns has also rebounded with the cotton price becoming international. C21S, C32S, India and Pakistan A+ yarns are even "hanging upside down" with domestic yarns. The quality of imported yarn is unstable, the supply is unstable and the quotation is higher than the domestic yarn. Therefore, increasing the production of high count yarn and enhancing the competitiveness of products will be the only way to solve the problem of China's cotton spinning industry.

For the cotton market, is the "dark before dawn" or "no downfall"? Some institutions, cotton mills and cotton enterprises are quite divided, and the air bearish and bearish atmosphere is still relatively strong. The profit factors seem to be very few. Zheng cotton's CF1609 contract has become the operation strategy of many investors and cotton trading enterprises. The main contract has returned to 10000 yuan / ton below or has fallen below the previous 9890 yuan / ton low point, which seems to be "iron nails". The domestic cotton price and the cotton price of India close to the "link" become the "benchmark" for predicting the decline of cotton prices.