Since Zheng Cotton has been running, the CF2201 contract has reached such a point. I think everyone did not expect it. To be precise, most people did not expect it. Especially in December, the downstream market had difficulty in selling and the market was pessimistic. Textile enterprises and trade Merchants have cut prices and reduced inventories to avoid risks.
The author discussed with others in November and expressed similar views. It is not appropriate to be overly bearish on Zheng Mian, and of course, it cannot be significantly bullish. In 2021, due to the rush to harvest by ginners, the cost of Xinjiang lint cotton was significantly higher than in previous years. Although prices have fallen in the later period, the average cost of new cotton is still very high. The acquisition and processing costs of each region and each factory in Xinjiang will vary slightly. The author estimates that the cost of cotton in Xinjiang should be at least 23,000 yuan/ton. With such a high lint cost price, there has been no hedging opportunity in futures, leaving only spot sales as a profitable avenue.
When the author was conducting research in Xinjiang at the end of October last year, I asked cotton ginning companies whether they would sell at a loss if the price of new cotton was lower than the processing cost. The company gave a negative answer. Because selling at a loss is the last outcome a company wants to see, anyone who can persist will grit their teeth and hold on. Indeed, cotton ginning companies did not break their promises and continued to stick to the sales bottom line of high prices. As a result, the spot price in the market basically did not change. However, downstream companies were weak in accepting it. As a result, the sales progress of new cotton lagged behind the same period last year.
Looking at the market trend in December, Zheng Cotton has continued to rebound, and the spot price has remained unchanged. The reason is that as delivery is approaching, the futures and spot price difference will return. The contract price of Zheng Cotton CF2201 is gradually approaching the previous high, and there is a high probability that it will rise to the previous period when it enters the delivery month. Near the highest point. At present, the price difference between Zheng Cotton CF2201 and CF2205 contracts is more than 1,000 yuan/ton, and the price difference is still large. If the spot market continues to remain strong, it means that the CF2205 contract will continue to rise as delivery approaches. It has become a reality for futures prices to catch up with spot prices in small steps. The development of the future market needs to accumulate new power. Whether it is upward or downward, it must be coordinated by favorable weather and geographical factors. It is not yet visible at the moment, so high fluctuations will be the norm in the near future. .
Looking back at this round of cotton trends, the main factor affecting price changes is market supply and demand. When the market price drops, many analysts look for negative reasons to write reports. When the price rises, they look for other bullish reasons. This market is always a market where a few people follow the trend accurately, and most people admit their losses and leave the market. As the New Year is approaching, the industry is basically in the off-season. After the Spring Festival, the traditional peak season will usher in. Changes in cotton and cotton yarn sales will directly affect futures price trends.
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