Domestic And Foreign Cotton Futures In December Showed Signs Of Stabilization And Rebound.

The ICE cotton contract in March started at a low level of 116.90, rising to 132.34 at the highest level on Friday, rising by 13.215%. In the domestic market, the Zhengzhou cotton main 1109 contract rose from 25380 yuan / ton in December 1st to 27415 yuan / ton on 7 days, or more than 6%.

It can be said that the global and Chinese cotton market has experienced initial sharp decline, and has initially stabilized and begun to rise again.

Market participants are still divided on this round of rebounding. The author thinks that the following aspects should be considered by cotton companies and investors.

Regulatory policy will not quit for a short time

Since the end of October, the State Council and relevant departments of the state have offered "combined boxing" in succession to the grim situation of the sharp rise in domestic prices.

In October 29th, the seven departments of the national development and Reform Commission jointly issued the urgent notice on maintaining the current order of the cotton market.

In November 2nd, the Xinjiang economic and Trade Commission of the autonomous region and the Xinjiang railway department jointly convened a railway pportation coordination committee for key materials and railways. Since November, the railway department has arranged 300 railway wagons to ensure the delivery of the Xinjiang cotton.

From November 22nd to November 26th, the NDRC issued five articles on implementing the notice of the State Council.

After the announcement of the above series of measures, the prices of some agricultural products should fall back, and initial results have been achieved in regulation and control. At present, the regulation policy will continue to affect the market later.

Cotton spot market continues to wait and see, buying and selling is not prosperous.

The domestic cotton spot market has changed since November 10th, though

Xinjiang cotton is speeding up.

After the November 2nd Xinjiang cotton pportation dispatching meeting, Xinjiang railway department maintained a daily pportation volume of more than 300 wagon, an increase of 50 knots compared with the previous year.

At the same time, in order to overcome the adverse impact of the construction of double line railway on Sinop, the autonomous region subsidized cotton pportation in the southern Xinjiang and implemented the combined pportation of highways and railways, effectively alleviating the difficulties in the adjustment of cotton output in the southern Xinjiang.

By the end of November, the Urumqi Railway Administration had accumulated 500 thousand tons of cotton in foreign pport, up 5.1% over the same period last year.

In order to prevent the goods from pporting goods, the departments concerned also specifically asked Xinjiang cotton related enterprises not to engage in the business of entering cotton into Xinjiang.

The import of cotton has already arrived in the early stage.

According to the US Department of agriculture, as of November 25th, China has signed 984 thousand tons of Upland Cotton in the United States, an increase of 810 thousand tons compared with the same period last year, and the shipment volume of 233 thousand tons, an increase of 128 thousand tons over the same period last year.

Support factors for cotton prices are weakening

Since the price of cotton has gone up this year, the export growth rate of textile products has been reduced due to factors such as short-term export orders, continuous appreciation of RMB and rapid increase in labor costs. At present, Christmas orders have generally been completed. At present, it is not realistic to expect larger orders before the Chinese New Year.

In terms of domestic sales, the price of clothing and grey cloth has been affected by higher factors, and the market sales are not warm.

According to the statistics of National Bureau of statistics, the output of grey cloth in China in 2010 October was 6 billion 250 million meters, an increase of 23.3% compared with the same period last year, and the annulus ratio increased by 1.96%.

From 1 to October of 2010, the total output of grey fabric in China reached 53 billion 830 million meters, up 18.2% from the same period last year.

According to the news of Huzhou Zhili cotton cloth city, in November, the market volume is not big, the price rises first and then callbacks, and it is estimated that the cotton market will also show a downward trend in December.

There is another factor that can not be ignored at present. The Spring Festival this year is earlier than in previous years. In order to save all costs, the textile enterprises usually have early holidays, and the reduction of textile production capacity before the year is basically a foregone conclusion.

As a result, the support factors for supporting cotton prices will be greatly reduced and cotton prices will go down.

Preganglionic capital environment weakens cotton price action {page_break}

According to the central bank's data, in October this year, the scale of China's credit increased by more than 587 billion 700 million yuan, for example, according to the scale of 7 trillion and 500 billion yuan in the whole year, in November and December, there was a total of only 610 billion yuan credit index.

It is also reported that after the first three weeks of November, new credit has exceeded 7 trillion and 500 billion yuan throughout the year.

From the recent news released by the central bank and the relevant commercial banks, we can see that by the end of the year, the keynote of tightened monetary tightening of the major commercial banks has increased, the difficulty of corporate credit has increased, and the financing environment has changed significantly compared with the previous stage, which will restrict the purchasing behavior of each end of the cotton industry chain.

Judging from the trading status of the cotton futures market, the volume of trading in the futures market has been decreasing gradually since the start of November 24th. The situation is likely to continue before the Spring Festival, along with the implementation of such measures as margin increase and intra day trading.

Therefore, if the quantity does not support, the possibility of a larger increase in the cotton market will be greatly reduced.

In summary, the spot market in pre - Cotton period will be difficult to get out of the sharp rise in the control measures, the supply of Xinjiang cotton and foreign cotton is loose, the enthusiasm of textile enterprises is not high and the Spring Festival factor will be affected. It is more likely to maintain the oscillation in the 25000 - 28000 interval.