Since September 28, the main contract of Zheng cotton has oscillated and rebounded after hitting the lowest point of 13,195 yuan/ton since mid-October 2020. It once broke through the resistance level of 13,800 yuan/ton (high point 13880) during the session. Zheng cotton’s rebound seems to have resumed. The market has seen hope of a turnaround in the weak cotton market.
Why has Zheng cotton stopped falling and risen at 13,000 yuan/ton in recent days? The author’s judgment is mainly affected by the following factors: First, the main US cotton ICE December contract rebounded from a low of 81.55 cents/pound to 89.78 cents/pound, and the continuous rebound of the external market supported the rise of Zheng cotton to a certain extent; second, the impact of Xinjiang Affected by the tightening of regional epidemic prevention and control, the export of cotton from Xinjiang has been affected to a certain extent since late September. Inquiries and transactions of Xinjiang cotton in the mainland in 2021/22 have been relatively active, and the spot price has driven the futures rebound; third, the recent Zheng cotton CF2301 contract price is not only consistent with The spot price of old cotton in 2021/22 is “upside down” by more than 1,500 yuan/ton, which is also lower than the “pre-sale price” of machine-picked cotton in 2022/23 by 700-800 yuan/ton. Futures prices need to be repaired; fourth, during the National Day, Xinjiang The purchase price of internal seed cotton has slowly increased by 0.15-0.25 yuan/kg, while the transaction price of cotton seed has declined. The cost of lint cotton has increased in 2022/23, which has provided support to the market price.
On the whole, the rebound of Zheng cotton is relatively limited. In addition to the insufficient quality of consumer terminals such as textiles and clothing during the “Golden Nine and Silver Ten” periods, the operating rate of weaving enterprises in Jiangsu, Zhejiang, Guangdong and other places has dropped significantly. The cotton yarn accumulation rate of cotton spinning enterprises has increased, and the yarn price has entered Descending channel. As Xinjiang cotton is launched in large quantities in 2022/23, futures hedging will become the most important hedging and sales channel for cotton processing companies, and futures firm pressure is very high. External forces such as the continued aggressive interest rate hikes by the Federal Reserve and the European Central Bank and the intensifying expectations of a global economic recession triggered by the Russia-Ukraine war cannot be underestimated. Therefore, Zheng Mian failed to maintain the upward trend after a sharp rebound and eventually fell back.
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