On August 1, Zheng Cotton’s main CF1709 contract opened with a “strong rise”. Why did Zheng Cotton’s main contract, which had been fluctuating downwards since July 21, suddenly change direction amid rumors of round extension?
It is understood that on July 31, a rumor about the rotation of cotton reserves spread like wildfire. The rumor was that “500,000-1 million tons of imported cotton will be imported in January 2018.”
Under this rumor, in the night trading on the 31st, the Zheng Cotton CF1801 contract followed the rise of the ICE December contract, and the CF1709 contract followed suit.
Just one rumor can change Zheng Mian’s sluggish trend?
Judging from the situation understood by many parties, first of all, the bullish sentiment has not calmed down, and there has always been a willingness to go long, which requires hype for the news;
Second, the current spot price of cotton has not fallen sharply with the decline of Zheng cotton, and the resistance of the spot to the decline has a supporting effect on the futures;
Third, there is a rumor that imported cotton is coming in. ICE futures rose on hearing the news, and the internal and external market trends converged;
Fourth, in the past two days, the number of listed Xinjiang cotton reserves has been less than 10,000 tons. The market is worried that the number of listed Xinjiang cotton reserves in August will drop to a lower level, causing a change in market mentality.
August is not only a critical period for cotton growth, but also a period of focus for the entire industry. In both postponement and rotation
With this rumor, how to rationally think about the next trend of cotton?
If both rumors are true, then until the new flowers are released, the supply of cotton will be sufficient, and the quality can meet the needs of most textile mills. The vacuum period in the cotton market will no longer exist, and the cotton prices of the new and old years will be steadily aligned; it is the window period. The price of foreign cotton has increased, the cost of foreign yarn has increased, and the product competitiveness of domestic textile companies has recovered. Judging from historical data, the January-February period was the trough of my country’s spinning output. At this time, the impact of the rotation on the production costs of textile enterprises should be within controllable range.
If both rumors fail to come true, 414,000 tons of Xinjiang cotton reserves will be released. The number of Xinjiang cotton reserves listed in August will rise to about 20,000 tons. Textile companies will actively bid for the goods, and the rotation volume and price will rebound. Cotton prices will remain high in the new year. Open the possibility; judging from historical data, import quotas will be intensively used in December. If there is no rotation in January, the price increase range of foreign cotton will not be large.
Rumors are just rumors after all, and cotton is not that fragile and cannot withstand the slightest disturbance. While waiting for the wheel storage boots to hit the ground, we must also digest expectations in advance and plan for the new year.
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