Since late June, Zheng Cotton has started a bottoming out market. The CF2109 contract rebounded from 15,400 yuan/ton to 16,670 yuan/ton (an increase of 1,270 points). After successfully breaking through the key point of 16,500 yuan/ton, Funds show signs of profit closing. Currently, the long and short sides are competing at 16,000-16,500 yuan/ton.
Some institutions believe that due to the impact of the black series, the decline of agricultural product futures oscillations and the continuous efforts by relevant national departments to cool down commodity prices, the main force of Zheng cotton may return to 15,000-16,000 yuan. / ton, but the author is not so bearish. Zheng Cotton’s judgment that the center of gravity has risen to more than 16,000 yuan / ton is basically established. 16,000-17,000 yuan / ton may be the space that the long and short sides compete for repeatedly from July to September. The reasons are briefly summarized as follows:
First, monetary policy is expected to gradually turn loose in the second half of 2021. On July 7, Premier Li Keqiang chaired an executive meeting of the State Council, which decided to increase financial support for the real economy and introduce measures to support carbon emission reduction. It is worth noting that the meeting also proposed the timely use of monetary policy tools such as reserve requirement ratio cuts to further strengthen financial support for the real economy, especially small, medium and micro enterprises, and promote the stabilization and decline of comprehensive financing costs. This is the first time since 2021 that high-level officials have issued a reserve requirement ratio cut signal, exceeding market expectations;
Second, due to weather factors, Xinjiang’s cotton output in 2021/22 is not expected to be optimistic. From April to May, most cotton areas in Xinjiang encountered low temperatures, precipitation, strong winds, sand and dust, and hail. Cotton farmers replanted or adjusted their planting structure many times. The current cotton growth situation is not ideal. Since late June, various cotton areas in Xinjiang have continued to issue red warnings for high temperatures, with temperatures in many places reaching above 35°C, which is not conducive to cotton growth;
The third is the rotation of reserve cotton and Zheng cotton. They may support each other and play a role in stabilizing cotton spot prices, stabilizing cotton farmers and cotton enterprises. As the CF2109 contract opened the 16,600 yuan/ton round mark, a large number of Xinjiang cotton hedging orders entered the market, resulting in a tight supply of spot goods, while traders’ basis sales in the 16,500-17,000 range slowed down significantly, and spot resources in 2020/21 were locked. , periodic structural contradictions have emerged;
Fourthly, the situation of cotton spinning enterprises receiving orders is not weak in the off-season, and the peak season of textile and clothing consumption in the third quarter may come early. As the United States, Europe and Southeast Asian countries have emerged from the epidemic, the global economy, trade, transportation, consumption, etc. have accelerated their rebound. China’s cotton textile and clothing production and sales are expected to recover across the board, and the sharp increase in expectations for RMB depreciation has paved the way for textile and clothing exports. the way. </p
