2019 Cotton "Rhapsody": The Three Trend Is "Startling At Every Step".

Guide reading

Stage 1:3 - June, the first wave and the adjustment stage.

Consumption orders began to increase in March.

From 4 to May, the policy of dumping and storage was clear, but Yu cotton was limited.

Import and export.

The northern hemisphere has entered the cotton planting period, with a slight increase in China and a slight increase in the US.

Mid May, huge warehouse receipt delivery, market or adjustment.

Stage 2:6 - November, third wave and adjustment stage.

After planting in May, the cotton in the northern hemisphere entered the growth stage from 6 to September, and the weather sensitivity increased. The storage and storage were carried out at the same time. The supply and demand were tight, and the long suppressed consumption began to recover.

After September, new cotton entered the harvest stage and the price dropped.

Stage 3:11 to next spring, fifth waves.

Early winter is a low consumption season, and also in the harvest season. It is a good time for textile enterprises to purchase and prepare their stores.

From deep winter to spring, it is the peak season for consumption in the textile industry.

Huge warehouse receipts are caused by market indigestion.

As of February 25th, Zheng cotton registered 17168 warehouse receipts, equivalent to 686 thousand tons of cotton.

After the May delivery, the registered warehouse receipts will enter the "de Stocking" stage, but the second half of last year showed a sustained growth trend.

Because of the downturn in consumption, cotton processors had to use the futures market to sell cotton, resulting in a continuous increase in registered warehouse receipts.

Recently, however, the registration of cotton warehouse receipts has stagnated and reduced. This may be the signal for consumption to start after the Spring Festival.

According to industry estimates, if the 1905 contract rises to around 15400 yuan / ton, then the spot selling of the spot traders will be in full swing, because 60% of the new cotton is not sold.

According to the exchange data, there are about 70 thousand tons of old cotton in the current registered warehouse receipt, and the remaining ones are new cotton.

As for the new cotton warehouse receipt, it will need to wait until the 1905 contract is delivered.

The accumulation of warehouse receipts is, in the final analysis, a result of sluggish consumption.

According to USDA data, China consumes about 730 thousand tons of cotton per month.

Therefore, once consumption increases, the pressure on warehouse receipts can be easily digested.

In March, spring is also the peak season for cotton spinning enterprises.

If so, before May, cotton prices were showing a slow trend in the wake of the revival of consumption.

According to convention, after the Spring Festival, domestic cotton will be launched.

Last year it began in March 12th and ended at the end of September, with a total turnover of 2 million 510 thousand tons.

According to industry estimates, the remaining amount of state cotton stocks is 2 million 700 thousand tons.

That is to say, if this year continues to be auctioned according to the plan and volume of last year, the stock of State Reserve will almost be emptied by September.

It can be said that after several years of national cotton auction, the "go to stock" task was basically completed.

If 18/19 does not replenish its stock, the market's regulatory role in the future will be greatly reduced.

Therefore, in order to maintain certain regulation of the market, the state level will certainly need to replenish the stock.

So far, the market has not yet thrown away the news of storage, considering that the state cotton stocks have been low, and the time of departure or postponed compared with previous years.

Therefore, when should we pay attention to when and how to throw it away?

When and how to replenish the stock?

There are hidden positive factors here.

In 4 and May, cotton in the northern hemisphere entered the initial stage of seeding and growth.

At this time, the planting area of cotton in China and the United States is an important data.

The area determines the general range of output and determines the trend of price.

According to the USDA practice, the intentional planting area of cotton in the United States and China is published every March 31st.

This is an official authoritative data.

Recently, China Cotton Association's survey data are: the cotton planting area is 47 million 710 thousand mu this year, a decrease of 2.7% compared with the same period last year.

In addition, according to the USDA Forecast Forum preliminary forecast: the US cotton planting area is 14 million 300 thousand acres this year, an increase of 1.1% over the same period last year.

The market will pay great attention to sowing and growing.

At this stage, area and weather are hype themes.

In May last year, the market of Zheng cotton rose sharply because of the bad weather at that time.

By mid May, huge warehouse receipts were facing deliveries.

At that time, this will be an important moment for testing downstream cotton enterprises to undertake a solid market.

How many new cotton warehouse receipts have been delivered?

What liquidation price is willing to undertake?

This is an important basis for judging the future direction of the cotton market.

1905 after the delivery of the contract, some of the warehouse receipts will flow into the stock market, so the pressure on the market will be greatly reduced. Some will continue to turn to the September contract for arbitrage.

These data reflect the prevailing market mentality and provide guidance for subsequent market fluctuations.

Entering the September, cotton in the northern hemisphere basically entered the picking season.

The picking period of cotton usually lasts 3 months, from September to November.

At this time, the weather changes still have a great impact on cotton yield.

Despite the harvest pressure, the market price is easy to descend; in history, the big market is also at this stage due to the reduction of weather.

For example, in the autumn of 2003 and 2010.

As far as agricultural products (000061) are concerned, the emergence of larger quotas is at harvest time, because output has become fixed.

"Going stock" is the strategic task of China's agricultural supply side reform.

The cotton market is no exception.

After several years of inventory "de", stocks gradually entered the normal state.

If we do not replenish the stock, we expect that the national cotton reserves will basically run out this year.

In recent years, the strategy of "de Stocking" in China's cotton industry is to restrict imports, and at the same time, it has benefited from the limited growth of sown area and the demand has been rising rigidly.

The gap between production and demand persists, and stocks are gradually reduced from normal to normal.

According to USDA data, "de Stocking" was opened in 2015/2016: in that year, China's output was 5 million 639 thousand tons, the demand was 7 million 838 thousand tons, the import volume was 959 thousand tons, and the gap between production and demand was 2 million 199 thousand tons, leading to the end of stock reduction to 12 million 345 thousand tons, and its inventory / consumption ratio was 157%.

In 2016/2017, China's output was 5 million 879 thousand tons, the demand was 8 million 382 thousand tons, the import volume was 1 million 95 thousand tons, and the gap between production and demand was 2 million 503 thousand tons, leading to the end of stock reduction to 9 million 998 thousand tons, and its inventory / consumption ratio was 119%.

In 2017/2018, China's output was 6 million 314 thousand tons, the demand was 8 million 927 thousand tons, the import volume was 1 million 246 thousand tons, and the gap between production and demand was 2 million 613 thousand tons, leading to the end of stock reduction to 8 million 278 thousand tons, and the inventory / consumption ratio to 92%.

In 2018/2019, China's output was 5 million 879 thousand tons, the demand was 8 million 818 thousand tons, the import volume was 1 million 633 thousand tons, and the gap between production and demand reached 2 million 939 thousand tons, leading to the end of stock reduction to 7 million 48 thousand tons, and the inventory / consumption ratio to 80%.

That is to say, by the end of this year, cotton inventory in China has basically entered the normal stage this autumn, but it is still on the high side.

The reason for the slowdown in inventory decline is: because of the Sino US trade problem, cotton consumption has not increased by 109 thousand tons, while imports have been enlarged.

According to the February USDA ninety-fifth agricultural products Outlook Forum, it is estimated that China's cotton production will increase slightly to 6 million 100 thousand tons (+1.8%) in February, the consumption will increase to 8 million 990 thousand tons (+2.0%), the import will expand to 1 million 960 thousand tons (+20%), and the gap between production and demand will reach 2 million 790 thousand tons, leading to the end of stock reduction to 6 million 100 thousand tons, and the inventory / consumption ratio to 68%.

Among them, there are 1 million 960 thousand tons of state reserve stocks.

Of course, such an assessment report is preliminary, and there may be a larger revision later.

Because planting area, growth climate, Sino US trade consultation and consumption trend will affect supply and demand inventory data.

1. the US side:

According to the USDA report of February, in the 2018/2019 year, the cotton planting area in the United States was 14 million 100 thousand acres (+11.0%) and the abandoning rate was 25.3%, the output decreased by 551 thousand tons to 4 million 4 thousand tons (-12%), the annual export volume was 3 million 266 thousand tons, and the final inventory was 936 thousand tons.

What is the forecast for 2019/2020?

USDA estimated at the ninety-fifth agricultural products Outlook Forum that the sown area of cotton in the United States increased slightly to 14 million 300 thousand acres (+1.1%) this year, and the abandonment rate was only 9.3%. Under normal weather and abandonment rate, the output of US cotton increased by 894 thousand tons to 4 million 988 thousand and 800 tons (+22.3%). The domestic consumption of 2019/ 2020 remained at 719 thousand tons (+3.1%), but the export volume increased by 440 thousand tons to 3 million 706 thousand tons (+13.3%), and the final inventory increased by 437 thousand tons to 1 million 373 thousand tons.

Despite the modest increase in area, the increase in output has increased by 894 thousand tons (exceeding expectations), enough to meet China's additional import demand, and there is ample inventory surplus.

It can be seen that under normal climatic conditions, the fluctuation of cotton in the next year is limited.

Perhaps this is not the case.

Attention should also be paid to the intended planting area officially announced on USDA3 31.

2. global situation:

According to the February USDA report, global cotton production decreased by 1 million 140 thousand tons to 25 million 790 thousand tons (-4.2%) in 2018/2019, and the global consumption increased to 26 million 920 thousand tons (+0.8%), and the inventory at the end of the year dropped by 1 million 210 thousand tons to 16 million 430 thousand tons (-6.8%).

For 2018/2019, the output of most of the main producing countries (such as the US and India) decreased, while global consumption rose slightly (mainly from India, Bangladesh and Vietnam), and the gap between production and demand was 1 million 130 thousand tons, leading to a further decline in final inventory in the past 7 years.

So the global supply and demand relationship is somewhat tight this year.

Therefore, in the year of 2018/2019, under the background of too much international environment, Zheng cotton market has a foundation of upward fluctuation.

What is the global outlook for supply and demand for 2019/2020?

In the USDA Outlook Forum, it is estimated that global output has increased by 1 million 750 thousand tons to 27 million 540 thousand tons (+6.8%), but consumption has increased slightly from 400 thousand tons to 27 million 320 thousand tons (+1.5%).

So, when the market returned to oversupply, the inventory consumption ratio dropped to 61%.

It seems that in the next year, the supply and demand of global cotton will become loose again, and the growth of supply will mainly come from the United States.

Under such circumstances, the fluctuation of Zheng cotton market will not be surprising, and it will be presented in the form of interval.

The report has a negative effect on the current market.

But historical changes and future facts will not be so mediocre and calm.

1., maintain a long-term pattern of rising inflation.

In the long term, the rise of cotton stems from the improvement of supply and demand.

The main factors are: cost support, 3128B standard purchase cost at 15200 yuan / ton level.

Trade relations between China and the United States will eventually return to normal.

Global supply and demand of cotton were tight in 2018/2019, and inventories dropped by 1 million 210 thousand tons.

China's production and demand gap was 2 million 939 thousand tons in 2018/2019, and the final inventory dropped to 7 million 48 thousand tons.

Only 2 million 700 thousand tons of State Cotton remain.

Replenish inventory sooner or later.

However, due to the obvious negative factors such as inventory, the operation of cotton market will fluctuate.

Therefore, for investors, the strategy is: on the upper edge of the interval, the industrial customers who have the stock can sell or sell the virtual call option; while those with purchasing demand can do more in the lower part of the interval or sell the virtual put option.

Obviously, for speculators who are willing to do more, they can not be aggressive, but intervene in the case of falling back to support; they are staged positions, and strong resistance means closing positions.

2. trend interpretation

To sum up, we have speculated about the future trend of Zheng cotton market.

As shown in the opening drawing.

At the present stage, we will make a forward-looking interpretation of the key factors affecting future market.

Stage 1:3 - June, the first wave and the adjustment stage.

Consumption orders began to increase in March.

From 4 to May, the policy of dumping and storage was clear, but Yu cotton was limited.

Import and export.

The northern hemisphere has entered the cotton planting period, with a slight increase in China and a slight increase in the US.

Mid May, huge warehouse receipt delivery, market or adjustment.

Stage 2:6 - November, third wave and adjustment stage.

After planting in May, the northern hemisphere cotton entered the growth stage from 6 to September. The weather sensitivity increased and the storage and storage were carried out simultaneously. The supply and demand appeared to be tight. The consumption of long suppressed recovery began to resuscitation.

After September, new cotton entered the harvest stage and the price dropped.

Stage 3:11 to next spring, fifth waves.

Early winter is a low consumption season, and also in the harvest season. It is a good time for textile enterprises to purchase and prepare their stores.

From deep winter to spring, it is the peak season for consumption in the textile industry.