Cotton price trend is still downward, facing the turning point needs four signals
Textile mill order volume, yarn prices tend to rise, cotton planting area and total output decreased sharply, global cotton de stocking basically completed.
International and domestic cotton prices are still in a downward trend. Zhengzhou cotton index fell from 15965 points in the second half of the year to 12945 points, down 18.92%. Although it was affected by the policy of direct subsidy, the cotton rush by processing plants and cotton production reduction, the maximum rebound strength was 1455 points from 12570 points to 14025 points. Although some investors believe that there are production reduction support, warehouse receipt generation constraints, technical point support and other factors at 13000, from the long-term trend of the Zheng cotton index, the decline should not be completed, and the 2008 low seems to be beckoning. In addition, since the beginning of this year, hedging transactions in the domestic market are prevailing, and the practice that one hand of other commodities will empty the other hand of cotton has made cotton contracts weak.
The author believes that some of the advantages looming in the cotton market can only be short-term support unless it has special strength. In terms of operation, it is still reasonable to sell high short, and arbitrage between varieties and months can be carried out according to the law of price difference during the period.
Since the second half of the year, under the background of slowing economic growth and declining demand in major economies other than the United States, major international commodities have shown a sharp decline. In terms of international cotton prices, the otlooka index fell from 90.70 to 66.15, down 27.07%. The fcindexm index of imported cotton fell 23.28% to 70.69 from 92.14. Domestic cotton ccindex3128b index fell from 17390 points to 14706 points, down 15.43%. International cotton supply and demand is still unbalanced. According to the USDA report in November, the global cotton production is estimated to be 26.042 million tons, the consumption is estimated to be 24.789 million tons, and the final inventory is 23.375 million tons. Although the global total output of new cotton was lower than that of the previous three years, the global cotton inventory at the end of the period continued to increase, and the inventory consumption ratio reached 94.3%, a new high for many years. Therefore, the pressure of de stocking has always existed.
Domestic production reduction is hard to cover the decline in demand. USDA estimates that China's cotton production in the new year will be 6.532 million tons, a year-on-year decrease of 8.4%. China cotton information network estimated 6.02 million tons, a year-on-year decrease of 13.0%. China's consumption is estimated to be 8.135 million tons (USDA) in the same month, with an increase of 8.163 million tons. The estimated consumption of China cotton information network is 7.75 million tons (average 645800 tons per month), with a slight increase of 550000 tons over the same period of last year. From the perspective of inventory, UDDA estimates that China's inventory is 13.533 million tons, only 120000 tons less than the previous year. The inventory consumption ratio reached 165.5%. According to the current monthly consumption, it will take 20 months to digest the inventory. From the perspective of downstream consumption, the total retail sales of clothing of 100 key large-scale retail enterprises decreased by 2.5% year-on-year in October. In October, China's exports of textiles and clothing amounted to 26.538 billion US dollars, an increase of 10.18% year-on-year and a decrease of 7.05% month on month. From January to October, China's textile and garment exports totaled US $248.473 billion, an increase of 6.36% year-on-year, and the growth rate was reduced.
The difference between domestic and foreign prices is still high. As a result, the attraction of foreign cotton is still increasing, the pressure of domestic cotton and domestic De stocking is difficult to be relieved in the short term, and the downward driving force of price continues to exist. Judging from the trend of ice cotton index, 60 cents has been broken. Once the support collapses here, 50 cents of sword index will be converted into CIF price, and the result will be chilling.
When will the international and domestic cotton market reverse? The author believes that judging the turning point of the cotton market needs at least the following four signals: first, textile mill orders are large; second, yarn prices tend to rise, among which the first two items need to maintain for at least two months and a certain increase; third, the cotton planting area and total output are sharply reduced; third, the cotton market is changing rapidly; Fourth, the global and Chinese cotton de stocking has been basically completed, and China's warehouse to sales ratio is at a low level.
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