Tip: The Zheng cotton futures market fluctuated greatly in the early stage, which also had a certain impact on the spot market. However, after Zheng cotton began to fall sharply, the cotton spot market went out of its own way!
For nearly two months, the spot price has basically been at a premium to the futures index price. However, with the sharp rise in the Double 11 futures contract, the spot price was once at a discount to the futures. As the futures surged, the spot price also had a certain premium. Follow the trend, but the increase is far less than that of futures. The Zheng cotton futures contract plunged sharply the next night, but there was not much movement in the spot market. At least there was no large-scale price reduction. On the contrary, some traders’ quotations were firm or even increased. Why have fundamentals become stronger?
1. Cotton stocks in textile companies are low
It can be seen that the overall cotton inventory of textile enterprises has been declining since October. At that time, considering that there was still a reserve cotton inventory in the spot market, and the price of new cotton was on the high side, textile enterprises have been in a position of not using new cotton if they can use the reserve cotton. However, as time goes by, the reserve cotton is gradually consumed, and there is not much commercial inventory left. Starting from mid-to-late November, the cotton inventory of textile enterprises has reached a relatively low position, and it is necessary to start purchasing and matching new cotton. use. However, due to the average demand for downstream yarn, yarn inventory has increased, so even if new cotton is used, there will not be much demand for stocking for the time being.
2. The progress of public inspection is slow
Comparing the above table, we can see that based on the large reduction in overall production last year, a bumper harvest was originally expected this year. However, the progress of public inspection this year was not as good as last year, and the launch of new cotton was significantly delayed compared to last year. In the later period, tracking the situation of new cotton may not be as optimistic as in the early stage. The output of the Xinjiang Corps was lower than expected.
3. It’s difficult to leave Xinjiang and shipping costs are rising
A certain amount of new cotton has been inspected, but the reason why prices have been difficult to lower recently is the problem of transportation out of Xinjiang. Since Xinjiang melons and fruits are concentrated on the market, and there are special green channels for transportation, truck drivers mostly choose to transport melons and fruits, which makes it difficult for cotton to leave Xinjiang. The freight continues to rise. Up to now, the cost of shipping to Henan has risen to 1,000 yuan/ Ton or more, the price has increased by 100-200 yuan/ton compared with the beginning of the month. The tension in truck transportation may last until the end of November. As for railway transportation, it is reported that due to policy factors, electrolytic aluminum has been shipped, making railway transportation difficult before the Chinese New Year. Both ways of traveling out of Xinjiang are obviously tense, so the inventory of new cotton in the mainland is very small, and the demand from mainland enterprises is gradually reflected, and the price of truck transportation may rise in the short term.
Summary: In summary, the above three factors are the factors affecting the current cotton market. The spot price may still be strong in the short term. With the acceleration of Xinjiang shipments in the later period, the supply of new cotton will increase. , spot prices may be weaker after December.
