Sino US Talks Release Good Cotton Prices Rising

Last week (October 7-11), the Sino US talks were good, and confidence in the market was encouraged, and cotton prices rose. Sales of cotton yarn have increased slightly and prices have been stable. The purchase price of new cotton is stable, but the cost of acquiring lint rises because of the decline in cottonseed prices. Chen cotton spot traded warmer, new cotton cost advantage is obvious, most optimistic about the market, sales are not positive. Cotton price CNCottonB index price 12672 yuan / ton, week fell 177 yuan / ton, compared with Zheng cotton futures CF2001 contract, spot premium 290 yuan / ton, week reduced 424 yuan / ton.

Futures. Sino US negotiations to release good, Zheng cotton low rebound, the main contract CF2001 closed at 12380 yuan / ton on Friday, the week rose 365 yuan / ton, Friday night continued to rise 210 yuan / ton, positions increased 71068 hand, an increase of 12.2%, capital began to flow. The market said that the new cotton production was cut down, and when the negotiation came out positive, the market was temporarily defeated by the long lost bulls. When the new cotton is on sale in large quantities, there is no final conclusion on the production reduction. The supply is still very abundant in recent years. The export of cotton yarn has dropped by 8.7% in 1-8 months, and the export of cotton cloth has dropped by 8%. In the future, we need to see if the order situation of the gauze can be restored, otherwise the cotton price will be difficult to go up. CY2001 is facing resistance of 13000 yuan / ton. If the order can be effectively restored, the cotton price will gradually oscillate upward. At present, the acquisition cost of new cotton is relatively low, and the sales of warehouse receipts are profitable. With the increase in the number of new cotton stocks listed on the market, the stock of Chen cotton is still large and consumption is limited, so the new cotton sales in the short term are limited. Once the disk adjustment is made, a large number of packages will be gushed out, forming a double force superposition and increasing the intensity of the disk adjustment. In addition, Sino US negotiations are still very long. From the perspective of the negotiation process over the past year, there is still a lot of uncertainty behind, which brings unexpected unexpected profits to the cotton market. The price of disk and the cost of acquisition will interact with each other.

Us disk: the US market rose sharply on Friday, with the December contract closed at 64 cents / pound, hitting a new high in the current round, rising 224 points in the week. The agreement between China and the United States has not yet been finalized, and there are still some uncertainties. The real growth of consumption is still waiting for some time. Cotton prices continue to rise, which needs to be supported by the following good momentum. Continue to track the progress of trade negotiations and district weather.

On the spot. Futures rebounded low, market confidence improved, the end of the round, the supply was relatively reduced, the cotton mill purchase spot increased, cotton spot trading warmer, the price center increased slightly. The mainland's 3128 hand picked Xinjiang cotton price is 12900-13100 yuan / ton, and Xinjiang cotton is 12300-12600 yuan / ton. As the external cotton rose faster than the inner cotton, the cost of importing cotton increased, the price had no advantage, the customs clearance decreased, Brazil 12900-13300 yuan / ton, Australia cotton 15300-16000 yuan / ton, West Africa cotton 12800-13300 yuan / ton, India cotton 13100-13600 yuan / ton. If futures continue to rebound, spot prices will stimulate more cotton mills to catch up with purchases.

Acquisition of new cotton. Futures stabilized and rebounded, and the confidence of seed cotton buying enterprises increased, and the progress of acquisition accelerated. As of October 11th, 269 enterprises in the country reported 102 thousand and 500 tons of new cotton, including 254 enterprises in Xinjiang, 98 thousand and 100 tons, and 15 enterprises in the mainland to inspect 4 thousand and 400 tons. The purchase price is relatively stable, the southern Xinjiang purchase price 5.5-6 yuan / kg, the northern Xinjiang mining machine 4.6-5.2 yuan / kg. The acquisition cost of new cotton is significantly lower than that of Chen cotton, and the sales of registered warehouse receipts also have profit margins, attracting a large number of funds from the mainland to go to the airport to enter the market. Overall, low price new cotton market has squeezed sales of large quantities of Chen cotton, and the acquisition cost is close to that of South and North Xinjiang, and hand picked cotton sales in southern Xinjiang are relatively good.

Operation suggestion. Although the Sino US negotiations have achieved some results, there is still a long way to go. There are still many uncertainties. Chen cotton has plenty of stock and new cotton is on the market. Cotton prices are historically low, but industrial inventories are low and rising. It is suggested that operational ideas should be established according to the location of enterprises, and the cotton weather and the progress of Sino US negotiations will continue to be paid attention.