Since June 18, Zheng Mian has started an oscillatory upward trend. The main CF2201 contract has risen sharply by 2,710 points in just two months, an increase of 17.16%. After the momentum broke through the 18,500 yuan/ton mark, the divergence of long-term funds gradually increased, and profit-closing operations increased. Therefore, the market of Zheng Cotton has experienced a short-term oscillatory correction. The intraday low once fell below 18,000 yuan/ton, and then the decline was recovered. The long and short sides were in a stalemate in the 18,000-18,500 yuan/ton range, waiting for monetary policy, cotton supply and demand Fundamental and policy guidance.
From a technical perspective, the bottom of the CF2201 contract at 17,700 yuan/ton has strong support, and the decisive battle between the long and short parties is earlier than in previous years. Cotton prices continue to rise, resulting in a large number of medium and high-quality 2020/21 cotton warehouse receipts and port clearance outer cotton cover orders being locked up, making it difficult to flow out, exacerbating the supply pressure of high-index, high-spinnability lint cotton in the market.
However, the author judges that after Zheng Cotton tested the second target of 18,500 yuan/ton, the rebound momentum showed a relatively obvious slowdown, and the divergence between the bulls and the bulls continued to increase. The competition starts around 18,000 yuan/ton.
First of all, the output decline in Xinjiang cotton areas in 2021/22 is expected to narrow significantly. A survey of 2,291 designated farmers in the Xinjiang Autonomous Region by the China Cotton Association showed that there were many extreme weather conditions in Xinjiang in July, but the duration was short and the impact was limited. Xinjiang’s cotton yield is expected to still fall by 0.71% this year, with total output reaching 5.2321 million tons, a year-on-year decrease of 0.22%, and the decrease is 0.9 percentage points smaller than the previous period.
Secondly, the quality of the “Golden Nine and Silver Ten” in the textile and apparel industry is questionable, or the higher the expectations, the greater the disappointment. On the one hand, Christmas and Easter orders in Europe and the United States in 2021 will be placed 3-4 months earlier than in previous years, and domestic textile and clothing companies will suffer from “overdraft” of orders; on the other hand, the rise of bulk commodities, low bargaining power of textile and clothing exports, and high sea freight Negative factors such as rising prices and the difficulty of getting a container ticket have caused the enthusiasm of my country’s textile and garment enterprises to receive medium and long-term orders to continue to decline. Production and sales in the fourth quarter of 2021 may face challenges.
Finally, the central bank’s monetary policy has not changed, and expectations of easing have been disappointed. The operating interest rate of 600 billion MLF is still 2.95%, the same as in July, and has remained at this level for 17 consecutive months, which means that monetary policy maintains a stable and neutral stance and has not turned to easing. The minutes of the latest Federal Reserve meeting showed that the Federal Reserve may reach the threshold of reducing the scale of bond purchases this year, and the People’s Bank of China will prepare accordingly to try to avoid the negative impact of external factors such as tightening of US dollar liquidity on the domestic market.
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