A cotton company in Heze, Shandong Province said that from the perspective of high profits of cotton textile mills, the comprehensive cost of Xinjiang cotton in storage, and the slow recovery of the global economy, trade, textile and clothing consumption, etc., the main contract of Zheng Cotton has exceeded 15,000 yuan. /ton greatly exceeded expectations and was unexpected.
Industry analysis shows that the reason for the continued decline of Zheng cotton and spot prices is not the fundamentals of cotton supply and demand. It can be summarized in the following three points:
First, Europe is facing the third wave of the epidemic, and the re-implementation of blockades in some countries has intensified market concerns about weak demand for crude oil, energy, etc., and global trade, economy, transportation, etc. may suffer another impact;
Second, the Xinjiang-related sanctions issued by the EU and China’s countermeasures have made the direction of China-EU relations unclear, and the pressure on textile and clothing exports has increased. Some foreign trade companies in Guangdong, Jiangsu, Zhejiang, and Shanghai said that since mid-March, foreign orders have There has been an increase in cancellations and postponements. Some analysts believe that sanctions against the EU may affect the EU’s economic and trade relations with China and the European Parliament’s approval of a key investment agreement;
The third is that although the central bank’s monetary policy has not However, in order to cope with the pressure of “opening the floodgates” and massive inflation in the United States, we can only take measures to tighten liquidity in stages. The financial, stock market, and commodity futures markets have overreacted, and panic needs time to repair.
At present, the sales pressure faced by domestic cotton processing companies has increased significantly (reluctance to sell and wait-and-see sentiment dominate), but for 100% hedging traders and futures companies But it is a good time for arbitrage operations. On the one hand, the net profits of cotton companies will expand compared with delivery; on the other hand, the trouble and risk of moving warehouses and transportation will be reduced.
According to feedback from cotton trading companies in Henan, Jiangsu, Shandong and other places, as the price of Zheng Cotton’s main CF2105 contract has continued to fall in recent days, pending orders and base prices for 2020/21 have The transaction of differential price resources is relatively active. Some cotton textile enterprises and middlemen seize the time to buy goods at low prices. However, the inquiry and transaction prices are concentrated in Xinjiang cotton with grade 4128/3128 and above and the quality index. However, the Xinjiang warehouse has low index and does not meet the quality index. The resources required by Zheng Cotton warehouse receipts are clear for shipment, and there are few markets for prices. Xinjiang ginners and traders are not very willing to move warehouses for sales. </p
