The lack of rising factors in cotton will be closer to the national annual closing price of 19800 in the new year

Recently, Zheng cotton main contract CF1201 was temporarily supported near 21,000, and there was a need for technical rebound in the short term. However, the author believes that due to the lack of fundamental factors supporting the rise, cotton is still difficult to get rid of its fate in the medium to long term.

Large-scale enterprises cut their purchasing prices

The spot market entered a stage of low sales. Some cotton enterprises were affected by a variety of factors such as the issue of loans from agricultural issuance and the continued decline in prices before the launch of Xinhua. They began to cut their prices and sales. A large-scale textile company in Shandong recently drastically lowered the price of four grades of cotton. . As of the 15th, Weiqiao Textile has reduced the purchase price of lint for four times within half a month. At present, the price of 429 is RMB 19,500/ton. This month, the company has reduced the purchase price of grade 4 lint by RMB 3,200/t, and it is expected that spot cotton prices in the future will continue to weaken.

Central Bank tightened policy has not changed

In June, the national consumer price index (CPI) rose by 6.4% year-on-year, a three-year high. To this end, the central bank announced two days in advance to announce that the deposit rate has been raised by 25 basis points since July 7. This was the third rate increase during the year, indicating that the tightening tone has not been changed. As the interest rate increase will exacerbate the tension in the capital chain of some industries, especially the textile industry, the probability of rising cotton prices in the afternoon will also be greatly reduced. On July 7, the monthly meeting of the European Central Bank Executive Committee decided to increase the benchmark interest rate by 25 basis points, from 1.25% to 1.5%, and a new round of global interest rate increase channels to deal with inflation opened.

Good growth in the new year

According to the weighted average cotton planting area of ​​the newly surveyed cotton farmers, the China Cotton Association estimates that the national cotton planting area in 2011 will be 81 million mu, which is 5.2% higher than the previous year. The National Cotton Market Monitoring System conducted nationwide survey of cotton growth from June 17 to June 30, 2011 showed that since June, the weather in China's major cotton producing areas has been basically normal, with mild occurrence of pests and diseases, and the picking period is expected to be within the normal range. If the weather is normal in the later period, the new cotton yield is expected to be 93.06 kg/mu, which is 9.29% higher than the previous year. The total cotton output is expected to reach 7.932 million tons, which is a substantial increase over the previous year.

The USD report data is generally bearish

The global cotton supply and demand report issued by the U.S. Department of Agriculture on Tuesday reduced the consumption and trade volume of cotton this year, raised the output and the total stocks at the end of the period; the report also lowered the US cotton production and export volume for the next fiscal year, and China’s import data also increased significantly. Lowered. On the 14th, the cotton export report issued by the U.S. Department of Agriculture also showed that the number of cancellations of textile mill contracts exceeded the amount of new contracts, resulting in a net contractual volume of U.S. upland cotton exports of -20,700 tons in 2010/2011, of which China cancelled 9,000 tons. This is a phenomenon that net signing has been negative for more than a dozen weeks since late March.

Global economy shows signs of deterioration

When the Greek issue had just gotten better, Moody’s Investors Service sharply lowered the rating of Portugal’s long-term sovereign bonds from BAA1 to BA2 on the 6th, that is, the rank of junk and rated the Portuguese sovereign rating as “negative”. Japan will once again put the AAA government bond rating on the negative watch list, which will increase the likelihood of default on US Treasury bonds. All these indicate that the global economy has shown signs of deterioration and that the global economy has been running at a later stage.

In short, due to the significant increase in cotton acreage production in the new year and the continuing downturn in downstream demand, the domestic tightening policy will not change, and the cotton price in the afternoon will continue to fall, gradually moving closer to the new country's national closing price of 19,800. Investors should short the rallies. should.