Last Friday, Zheng cotton futures staged a fiery “drama” from the upper limit to the lower limit! People in the industry have said that this market situation simply makes people’s hearts beat in their throats and makes them unable to stop. The trend of cotton prices has deeply affected the hearts of textile companies in the past six months. It has risen crazily and dropped sourly. So today I will take you to listen to what Wu Faxin, chairman of Shanghai Yarnbao Technology Co., Ltd., an industry expert, has to say. Opinions on this market trend:
A three-day “Cotton Futures Analyst Training Course” was organized at the Zhengzhou Commodity Exchange from 11.08 to 11.10 in 2016. I was invited to be a lecturer in the basic knowledge training of cotton yarn futures and lectured the students on “Basic Knowledge of Cotton Yarn and Pricing Basics” “More than 200 analysts, investment managers and entities from the cotton and cotton yarn industries gathered together. This training class has a strong lineup and the effect is very significant. The future star analysts and investment gurus in the lengthy “cotton-textiles” industry will emerge from these groups of people.
After giving lectures at Zhengzhou Commercial Institute, I received many WeChat messages from friends, all asking what they think about the market outlook for cotton’s rising limit. Before answering these questions, I am used to asking about the sales of downstream products, such as the sales of cotton yarn and gray fabrics. My brothers will communicate with me the transaction prices that actually occur in the market.
As the price of upstream cotton CF1701 increases, the quotations of downstream cotton yarn traders also rise tentatively. For example, the price of some traders’ carded 32-count pure cotton yarn has tentatively increased by 50-800 yuan per ton (the quotation has increased, and the actual transaction price can be discussed privately), while the cotton price is 21X16/128X60/63″ and 32×32/130×70 /63″ Gray fabric prices have barely increased because printing and dyeing factories and garment factories do not recognize the upstream quotations (their own inventory has been squeezed a lot).
As we all know, for industrial products, the price transmission from raw materials to finished products depends on the quantity of commercial and industrial inventories. In other words, no matter how upstream cotton and cotton yarn clamor for price increases, downstream companies just refuse to pay. The so-called price increase has another purpose. At best, it is a process of “moving warehouses”. If the price of upstream cotton increases, the downstream cotton yarn will immediately clamor for a price increase. This is an extremely unprofessional operating strategy and will be laughed at by peers. For example: as soon as the price of the CF1703 contract increases, cotton yarn traders will immediately follow in the group. Shouting for price increases.
My friend, the cotton yarn you are selling now is spun from cotton 3 months ago, and the cotton in the CF1703 contract will not be spun into yarn until May 2017. Months later. In this way, the mentality of shipping when the cotton and cotton yarn markets are high (looking for excuses) is undoubtedly exposed. As soon as the futures price fell, those cotton yarn traders who originally clamored for a price increase fell silent. Cotton yarn traders were worried about losing old customers, so they could only secretly give the weaving factory owner a symbolic increase in price. The owners of the downstream weaving factories are also very smart. They have no orders in hand. Even if the cotton yarn trader shouts, the weaving factory owners still refuse to buy an extra pound of cotton yarn, so a strange circle appears: the cotton circle shouts for a rise. If the price is too low, the textile mills won’t buy it, and you can just shout it, and the market will be very cold.
Hype is speculation, and the real deal will be discussed in private. Cotton market prices are soaring. The recent cotton shortage caused by transportation and other reasons has given bulls an excuse to exert force. I have pointed out many times that the bulls have “the presence of the national team” this time and must not go against the national team. High cotton prices directly lead to the loss of international competitiveness of downstream products, and also give imported cotton yarn an excuse to “counterattack” again. It is reported that due to the rapid rise in cotton prices in mainland China, cotton yarn from Vietnam and India began to be shipped to China in large quantities, and some varieties were sold out on the way.
At the same time, the foreign exchange market is not peaceful either. On 11.11, Double Eleven, at 14.30 pm, CNY offshore @6.84 is around, this is going to the rhythm of 7. Such a devaluation of the currency has added fuel to the fire of rising raw material prices. According to past experience, behind the rapid rise and fall of the market is often the strategy of “locking orders” by the main force. After the main force of cotton locks up the position, it wildly increases the futures price, attracting follow-up orders. Since the cotton industry chain is very long, in this long industry In the chain, only cotton is open for futures trading, which gives the main players an opportunity to make waves. If “cotton yarn futures” could be opened as soon as possible, it would not be so easy for major institutions to make waves in the cotton market like they did in 2016. I sincerely hope that this “cotton yarn futures” can be opened as soon as possible, which will play a “smoothing” and “buffering” role in the price fluctuations of the entire “cotton-textile” industry chain.
America’s “Funny King”–SichuanMr. � was elected as the new president of the United States, which means that trade protectionism is on the rise, and international trade conflicts in textiles are the first to bear the brunt. The cotton and cotton yarn market will not be peaceful in the future, and the fluctuations will be more severe. If there is no support from downstream orders and funds are allowed to push up the price of cotton raw materials, it will create “soil for tulip bubbles.” Cotton and cotton yarn trader, your mother has called you home for dinner.
