Cotton Enterprises Hedging Concerns Cotton Yarn Price Increases

Since late December 2019, Zheng cotton contract has rebounded sharply, not only causing the price difference between the ginning factories and traders, but also the sharp rise in the price of the shares. Judging from the survey, up to now, the "double 28, double 29" lint quotation in the territory's regulatory database has increased by 600-800 yuan / ton compared with the middle of December. Although cotton textile mills and middlemen have very few inquiries, they are still optimistic about cotton market in the first half of 2020, due to the low financial pressure before the cotton business, the signing of the first stage trade agreement between China and the United States, the release of liquidity from the central bank and so on.

From the survey of textile enterprises in Henan, Shandong, Hubei, Jiangsu and other places, cotton mills have been trying to raise the price of cotton yarn by a large increase in cotton prices. The price range is generally 300-500 yuan / ton (some cotton mill high count yarn and combed yarn are slightly larger), but the cost of short term weaving, clothing and other terminal links is still very difficult to transmit and digest.

At present, when weaving factories, printing and dyeing, clothing and trading companies have sold goods at the end of the year, the stock of cotton yarns and grey fabrics has been continuously compressed, and cotton and cotton yarns have been waiting for a wait-and-see attitude. In early January, some small and medium-sized cotton mills in China have gradually entered the rhythm of the vacation, and the impact of cotton and cotton yarn rising will be postponed until after the Spring Festival. Due to the lack of effective support for volume, the quotation of cotton yarn is still in a state of inflation. Hedging is a feasible way to avoid risks.

In the past two days, Zheng cotton's CF2005 contract continued to consolidate near 14000 yuan / ton, and the cotton enterprises of the 13800 yuan / ton or even 14000 yuan / ton or more of the two sides were stalemate and stalemate. There are four reasons for the analysis.

First, the whole cotton market is bullish sentiment, and cotton enterprises are worried about the "waist" in the price of Zheng cotton. Once the main contract is broken up from 1 to February, the main contract will be broken up by 14500 yuan per ton or more, and the deficit is too large. Two, the insurance covers from 10 to November are almost locked up, and a lot of money is occupied, and the cotton mill and cotton enterprises are not able to get enough. The three is that the quality of the flower slips in Xinjiang is more obvious in the late 2019/20. Some batches even match the warehouse receipt conditions, and the premium is higher. Therefore, the cotton processing enterprises are more likely to sell in the spot. Four, some cotton enterprises are facing the pressure of paying the loan according to the comparison, from 1 to May in 2020.