Interpretation Of Cotton Market: How To Treat The Policy Of Dumping And Storage

Since 2016, from the beginning of the year to now, the cotton market will undoubtedly focus on how to interpret the logic of throwing and storing policy.

Over optimistic to over pessimistic, the price rises from 9500 to 16000.

At the beginning of the year, the market was too pessimistic about the state's policy of dumping and storage, and the market fell and fell again. We saw that it reached 9500 at the beginning of the year, and some even thought it would go to 8000, ICE to 40 cents.

At that time, the market thought that not only the huge quantity of dumping and storage would be a serious impact on the market, but also a very pessimistic view of the consumption of Chinese textiles.

The smaller the amount of cotton, the more pessimistic atmosphere of the market.

But then we saw that the international market did not show the same decline.

Our consumption is not declining but rising.

Especially after the emergence of low-priced cotton in the late period, our price is really in line with the international market. Our company even ushered in a long lost high profit, and the profit of cotton yarn was over 1000 yuan.

Today we have gone to the other extreme, that is to say, our cotton prices are rising at a price per day. Can cotton consumption continue to grow? Due to the delay in throwing storage time, and then seeing the quantity and progress of dumping, it is far from meeting the needs or expectations of the market as promised.

For example, if the turnover rate of thirty thousand tons per day is seventy percent, the reserves will be increased.

As a result, thirty thousand tons often fail to reach 100% daily turnover, let alone increment.

From the beginning of the interpretation of policy to the process of dumping and storage, it is the process of passing spot futures.

So far, we are still reading, implementing, expecting and trading around the policy of dumping and storage.

Others are floating clouds.

The shortage of the number of throwing stocks has led to a large increase in the enthusiasm of market purchases, and even can be described by panic.

The domestic cotton prices rose rapidly, resulting in the rise of domestic cotton yarn. The rise in yarn prices resulted in an increase in import yarn, and the price of imported yarn was strong, which led to a surge in cotton prices.

There are still one or more factors in this evolution process, but the decisive factor is the policy of Pat storage.

So this is the policy market.

There may be different claims in the market, such as capital push, technology graphics, India cotton price rise, USDA report and so on.

Yes, but the core logic is to throw away reserves.

In other words, if the policy of dumping and storage is like that, 30 thousand tons per day will not be enough to throw 50 thousand tons. Can we imagine the difference between our current market trading process? The answer is 100%.

What is the result?

At the same time, it is also a double-edged sword. The domestic cotton mill has suffered heavy losses, the consumption has declined, and the import yarn has been incrementally increased, which has greatly stimulated the enthusiasm of cotton production all over the world.

Going stock is hard and long.

Do not think that the stockpile of cotton stocks is a matter that is irrelevant to finance. With a little economic sense, it can be calculated that the annual cost and quality variation is also a waste of tens of billions of dollars, and no one gains.

Before 2012, cotton consumption accounted for more than 50% of global textile fiber, to about 27% now.

The reason for the sharp decline in cotton consumption is the high price of cotton for 12 years, leading to the replacement of cotton with all kinds of man-made fibers.

There are few good days for cotton.

This round of cotton rose, the downstream reflects very slowly, the price of man-made fibers will not follow, will bring hidden trouble to the future consumption of high priced cotton.

Although it seems that the daily reserves are insufficient, we have dropped one million tons in 562 months.

In fact, one million tons, plus imports, plus this year's spot, is enough for two months of consumption.

But why is there such a panic? There may be two reasons. First, enterprises want to increase inventories to cope with uncertain supply.

Two, many of the national cotton reserves were taken by traders.

In statistics, maybe forty percent of the proportion is removed for part of the shoot for the textile mill. Cotton traders will buy the cotton bags later, and form their own stocks.

If this business inventory is twenty percent, then our enterprises will get eighty percent of the effective supply of cotton by throwing them away.

So what we are seeing now is the supply of the cotton market.

It began to look a bit inadequate.

As the futures rocket rises, the spot price lags behind, leading to the attractive base of the hedging and getting better and better.

Cotton merchants have no reason not to interfere.

But the market has been rising, and it has not been able to give this part of cotton the opportunity to enter the market. This part of the cotton has become a commercial inventory.

We all know that there is no market that will rise or fall.

Once the decline, futures will fall more than the spot price, the base change, do not worry about this part of the cotton does not enter the market.

Therefore, the participation of cotton merchants is also a double-edged sword, providing social financing and more after-sales service, and more importantly, the price will be more competitive.

How the market goes next depends on

It is the policy market, and even in the future, the policy of throwing storage as the dominant factor must be crucial.

All other factors will go away.

In turn, we can see that our policies have a great impact on the international market.

We don't believe it. Our cotton is 80 cents and the international market can rise to 90 cents.

That only means that our cotton price is lower than that of the international market, that is, the import of that 894 thousand tons, nor do we need it.

In the short term, the international market will not be that big.

The market is expecting a change in quantity to quality, and has been looking forward to it for a long time.

The demand version is very full, and the result is really beyond the ordinary imagination and continues to look forward to.

At present, cotton has indeed entered a high price area. From the original 9500 to the recent 16000, it has increased by nearly 70%, but the price will be inhibited to a certain extent.

In the past, it is certainly not so powerful to go up, but the ups and downs will not depend on the simple analysis in the market.

Whether the policy is adjusted or adjusted determines the market trend in the future.

Without any adjustment, the market is going to rise too high to say, because supply is not enough, tight stock can not be satisfied, and some of the consumption in the market is rigid.

It must be the high price.

The expectations of policy adjustment are summarized in the industry.

One is to reduce the prescribed inspection ratio and increase the number of daily listings.

The second is to extend the storage time from the end of August to the end of September or longer.

The third is that the cotton outside the public pick up allowance (which is different from the inspection results in the current year, is not necessarily bad cotton) should be auctioned out to increase the supply quantity.

In fact, there is also a demand that cotton merchants should not participate in the auction in a short time.

In this way, the effective paging mechanism can be directly linked to the factory.

To sum up, from a large logic and source, the price of the market is up or down, and it does not depend on a simple fundamental analysis.

Can we have a policy adjustment in the coming time to supply more cotton to the consumer market? This is a big logic for us to look at the market.

Whether or not to change or not is likely to be beyond our imagination or need any explanation or reason. We only hope that we should not cut the leek repeatedly.

At the same time, there is reason to believe that the government is not not able to see the various phenomena, difficulties and aspirations in our market. They are also actively trying to find some solutions. However, the government's behavior is not as simple as we think. Policy changes need to be reached by a number of departments and approved by the higher authorities.