On the first day of trading after the holiday, Zheng cotton rose sharply. The highest point of the CF2205 contract once rose to 22,210 yuan/ton, continuing to hit new highs. The market has a strong bullish atmosphere. Today, clinker suddenly retraced significantly and returned to 21,800 yuan. /ton, the price fluctuated by nearly 400 points in one day, which shows the violent fluctuations. This may become the norm in future operations.
Now that Zheng cotton has reached a high range of more than 20,000, it means that the room for shocks will become larger and larger, and the risks will also suddenly increase. According to the latest Zheng cotton price, there will still be a lot of Xinjiang cotton that cannot be hedged. Although the price difference between futures and current prices has gradually narrowed, there is still a large gap between the high cost of Xinjiang cotton.
According to the latest data from the National Cotton Market Monitoring System, based on the estimated domestic cotton output of 5.801 million tons (forecast by the National Cotton Market Monitoring System in December 2021), as of January 27, a total of 5.619 million tons of lint cotton have been processed nationwide, a year-on-year decrease of 239,000 tons. , of which 5.163 million tons were processed in Xinjiang, a year-on-year decrease of 78,000 tons; the cumulative sales of lint cotton were 1.771 million tons, a year-on-year decrease of 1.746 million tons, of which Xinjiang sales were 1.482 million tons, a year-on-year decrease of 1.570 million tons.
The above data shows that Xinjiang’s cotton sales account for only about 28.7%, and there are at least about 3.69 million tons of cotton remaining in the hands of ginners and traders for sale. The key is that a considerable amount of cotton has not yet been hedged in futures. As prices rise in the future, hedging opportunities will gradually emerge for Xinjiang cotton, and the industry’s short power, which has been looming before, will emerge.
According to relevant analysis, the price of Zheng cotton is now at a high level. If the price can continue to rise, more high-cost Xinjiang cotton will inevitably be released. It is expected that as long as the price of Zheng cotton reaches more than 24,000 yuan/ton, Xinjiang cotton will have a chance to catch up. Once this short-selling force forms in the market, if funds want to continue to pull up, the pressure will be too great and it will be more difficult. Futures market prices always move in the direction of small resistance. At that time, the upward resistance is far greater than the downward resistance, forming a situation where it is easy to fall but difficult to rise.
At present, foreign cotton is performing strongly, forming strong support for domestic cotton. The bullish factors have not yet been fully released. In addition, the spot price is strong. Zheng cotton does not have the conditions for a deep decline in the short term. At present, it still maintains strong shocks and runs downward. The trend has not yet formed.
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