Too Pessimistic Expectations Lead To The Release Of Cotton Demand Or Soaring Prices.

After 2 months of continuous decline, cotton has finally come back to a long bounce. The 1709 contract has gone out of 6 plus Yang, and the market confidence is multiplying. The enthusiasm of the reserve cotton market is very high. It is too hot to describe it, while the 9-1 spreads continue to go up.

The popularity of the market is mainly due to

The 9-1 price difference is caused by changes in different market years.

This year, the market is in a pessimistic view of the macro economy, and there has been a marked decline in the first half of the commodity market.

However, the macroeconomic data in recent months have stabilized and rebounded, indicating the tenacity of the real economy and stronger demand for commodities. Therefore, we see that as long as the supply side is not too profitable, the trend of this year is relatively strong.

Market pessimism of demand has also been affecting the Zhengzhou cotton market. When we look at the trend of cotton in recent years, we will find that the overly pessimistic demand for cotton leads to overfall of cotton, and once demand is released, the price will rise suddenly.

For example, in the first half of 2014 and 2015, including the first half of 2016, many people expected the domestic cotton demand to be calculated by about 6000000 tons. Then the production and operation arrangements were made with such data, resulting in the continuous compression of social inventories. Finally, the situation of tight stock before throwing the stock last year made the cotton price rise suddenly.

Back to this year, although we believe that demand has recovered a lot, and the demand for cotton has been raised, it is not enough.

In the first half of the year, when we met with market participants, we thought that the demand for cotton was about 7 million 500 thousand tons or 7 million 800 thousand tons this year, which is already very good. But from the current situation, it is possible to reach 8 million tons or even 8 million 300 thousand tons.

In fact, in addition to China, the demand for the international market has also continued to exceed the market expectations. We see that the adjustment of demand in the last two years by USDA is basically based on the high level of adjustment.

The main reason.

At present, the annual demand of cotton yarn in China is about 8 million tons, and the domestic volume is about 6 million tons, and the annual import volume is about 2 million tons.

At the same time, there are many kinds of cotton yarn in China, and there are more than 700 kinds of yarn at present.

Cotton yarn futures contract benchmark deliveries are selected as 32 carding yarn, mainly based on the large scale of the market, and the market can provide enough delivery if futures trading starts, so that the risk of delivery can be prevented.

In addition, 32 branches were selected.

It also accords with the market structure of small and medium-sized enterprises, and can meet the demand of market hedging more widely.

More importantly, 32 cotton combed yarns are recognized as low price, medium and high price benchmark in the industry, which is conducive to the price discovery function in futures market.

The cotton blending ingredients are consistent with the cotton futures benchmark deliveries and facilitate the arbitrage of industrial enterprises.

From the current development situation of cotton yarn Market in China, the market shows a large number of enterprises, low industrial concentration, and the gradual pfer of production structure to high cost combed products, the increase in import volume and the slowdown in growth rate, the reversal of internal and external spreads, and the advantages of domestic cotton yarn.

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