According to statistics, as of January 4, 2022, there were 14,325 Zheng Cotton warehouse receipts and 1,464 valid forecasts. The total number of warehouse receipts increased by 2.87% compared with the same period in 2020/21. In just two months, the number of Zheng Cotton warehouse receipts increased significantly. What is also particularly noteworthy is that the proportion of new cotton in 2021/22 among the current Zheng cotton registered warehouse receipts is significantly higher than the proportion of new cotton in the same period in 2020/21, indicating that there is greater enthusiasm for registering new cotton and generating Zheng cotton warehouse receipts this year. .
Why is Zheng Cotton warehouse receipts growing rapidly against the trend when the comprehensive cost of Xinjiang cotton in storage is 2,000-3,000 yuan/ton higher than the main contract of Zheng cotton? The author believes that there are mainly the following reasons:
First of all, in 2021/22, the phenomenon of “difficulty selling cotton” among cotton processing enterprises is more prominent. The sales progress of Xinjiang cotton has declined significantly year-on-year. Cotton enterprises will push high-quality lint cotton to Zheng cotton for “hedging” (or arbitrage). On the one hand, it will reduce the market outlook. Operational risks. On the other hand, hedging orders will generally be regarded as sold by the lending bank, reducing the pressure of proportional loan repayment.
Secondly, the CF2201 contract accounts for a large proportion of delivery, and some hedging ginning plants are rushing to register warehouse receipts to prepare for delivery. According to statistics, as of December 25, Zheng Cotton’s January contract positions are still as high as more than 58,000 lots (more than 290,000 tons per side).
Thirdly, the number of registered warehouse receipts for lint in the Yellow River Basin and Yangtze River Basin in 2021/22 has also increased rapidly, which is very different from the performance in the same period of the previous year, especially the batches with “Double 29” and above quality indicators.
Finally, since December, Xinjiang has significantly increased its efforts to move warehouses to the mainland. Among them, the truck transportation out of Xinjiang is mainly carried out by traders to ship high-index cotton. First, the registration of warehouse receipts for Zheng cotton in the mainland warehouses is relatively fast, so there is no need to wait in line; second, it is close to consumption In this area, traders can be prepared with both hands and switch between hedging and arbitrage at any time. Therefore, traders and cotton processing enterprises in Xinjiang are highly motivated to move warehouses for hedging or sales.
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