There are four uncertainties in the current cotton market

Editor's note: Whether it is the Chinese government’s unlimited policy for purchasing and storage, the Indian government’s ban on exports to raise international quotations for Indian cotton, or the macroeconomic adjustments that keep high inflation at a constant level, the bottom price of cotton prices is strong and cotton is difficult to return to the past. The low price level.

The one thing that can be confirmed is that whether the Chinese government’s unlimited policy on storage and storage, the Indian government’s ban on exports to raise the international quotation on Indian cotton, or the macroeconomic control that keeps high inflation at a constant level, the cotton price at the bottom is strong and cotton is very difficult. Go back to the past low prices. From the supply and demand situation of the current year, the supply pressure has not decreased, consumption continues to be weak, and the constraints on the rise of cotton prices are very obvious. The USDA's March forecast report showed that global ending stocks increased by 31.9% to 13.569 million tons, while inventory consumption increased from 41.3% in the previous year to 57.3%, the highest level in the past decade. While China's cotton market experienced a decline in consumption, production and imports also increased, resulting in an increase of 73.1% in ending stocks to 4.327 million tons, and an increase in inventory consumption from 25.2% to 46.2%.

China National Cotton Research Corporation's survey speculates that in March the national cotton industry stocks were about 1.023 million tons, an increase of 6.4% from the previous quarter and an increase of 17.6% year-on-year, an increase of 7.3% from the average inventory in the past three years. Although the yarn and cloth production and sales ratio of textile enterprises rebounded slightly, they were still at a relatively low level in the past three years, and the inventory backlog was obvious. The current situation of loose supply and soft consumer stagnation has determined that the cotton price is still in a weak position, and the band's investment strategy is empty. In practice, you also need to be vigilant about possible future risk factors.

First, China's textile and apparel exports fell sharply in 2011, only up 0.5% year-on-year. The Textile Chamber of Commerce predicts that the demand for textile and apparel exports in the first half of 2012 will remain insufficient, and the export volume may show negative growth. The crisis facing the textile industry has caused concern in the industry. The representative has called for reducing the tax burden on the industry. If the relevant support policies are issued in the later period, it will inevitably stimulate consumption or drive a part of cotton demand.

Second, the end of storage on March 30, which is a five-month period from September 1st, which is the time window for import quotas, the circulation of imported cotton and domestic cotton may promote internal and external Spreads converged. If the peak season of consumption does not start as usual, the possibility of a fall in domestic cotton prices cannot be ruled out. By then, for the cotton traded on the market, the closing price of 19,800 yuan/ton will be invalid, while the price of 20,400 yuan/ton will only be valid for the new cotton in the coming year.

Third, in the April and May concentrated sowing period and the subsequent emergence period, cotton faces an unknown weather condition. The distribution of cotton at home and abroad is widespread and scattered, and local disasters may be very large. The area and extent of the affected areas need to be tracked and measured.

Fourth, in recent years, there have been major changes in the production and sales of the international cotton market, and the share of each country’s global share has also changed significantly. In terms of output, India has surpassed the United States, second only to China. India has a large area for cotton cultivation but low yields. In the future, India may become the largest producer of cotton by improving technology. As for consumption, the share of consumption in the United States has declined significantly, and China’s share of consumption has declined slightly, while consumption growth in countries such as India and Pakistan is expected to increase. In terms of exports, the proportion of exports from India, Australia, and Brazil continues to increase, while that of the United States quickly shrinks. This series of changes also has an indirect effect on the pricing of cotton in China and the United States. The international influence of India and other countries in the cotton market has gradually increased. The cotton supply and demand situation and changes in the cotton market policy are also worthy of attention.