What’s the reason for Zheng Mian’s sudden daily limit? Funding speculation is “high fever” and the profits of textile companies are suppressed again!

“I’m crazy, I’m crazy, all commodities are hitting the limit!” In the atmosphere of Double 11, when you hear the word “up”, you are a little confused. Double 11 is supposed to be a rhythm of buying and selling at falling prices, but this morning, the author Looking at the circle of friends, all I see is news about the skyrocketing price of raw materials. Some people even said: It is strongly recommended that Jack Ma include raw materials in the sales scope of Double 11 products! This time the market rose sharply. Cotton, which was originally relatively “calm”, couldn’t hold it any longer. As of 23.15 last night, Zheng cotton futures hit the daily limit of 16,270 yuan/ton! The increase reached 5%!


Since a wave of daily limit on September 20, Zheng Mian can be said to have lived a “peaceful life” during this period. Although there have been small rises and small falls, the overall market trend is quite stable. However, last night, The sudden daily limit increase in the night trading still made people in the industry say: The cotton market is really frightening! So, what factors caused the main contract of Zheng Cotton to follow the hot trend of commodities?
India suddenly announced that it would stop using large-denomination currencies, and the purchase of seed cotton slowed down
Yesterday, India suddenly announced that it would stop using 500/1000 large denomination currency. If you exchange or deposit the banknotes in a real-name bank within 50 days, you may be fined 200% for cash from unknown sources. This move in India has slowed down the purchase of seed cotton and caused problems in payment of seed cotton for fabrics at ginners. In the short term, although farmers can use the government-stipulated exchange quota, they are still afraid to accept large amounts of cash. Moreover, this exchange amount is very small. Each person only has a limit of 4,000 per time, and can only exchange 10,000 (equivalent to RMB 1,000) per week. This has a great impact on the acquisition of new flowers in India, and the acquisition volume is only half of the normal level. As a result, Indian cotton yarn prices generally rose, resulting in a reduction in exports.
Xinjiang’s tight transportation capacity and capital inflows provide support, and textile companies are actively replenishing their stocks in stages
Recently, in addition to cotton, fruits, coal, etc. have also been exported from Xinjiang, causing tight transportation capacity in the short term. At this time, textile companies are gradually increasing their warehouse replenishment pace, which is obviously beneficial to the cotton market in the near future. Textile companies restocked a large amount of cotton in September just to cope with the current lean market. According to statistics from relevant departments, as of the end of September, the industrial inventory of textile enterprises was 700,000 tons, and the commercial inventory of traders was 500,000 tons. Based on the monthly consumption of 650,000 tons, there are currently only 550,000 tons of old cotton resources available in the market. With less than one month’s consumption, textile companies are in urgent need of replenishing their stocks. In addition, after the National Day, yarn prices rose to a certain extent, textile companies’ profits increased, and their acceptance of early high-priced cotton increased. Recently, some traders said that purchase orders from textile companies have gradually appeared, and cotton prices have begun to rebound. It is estimated that within 7-10 days, textile companies will receive significantly more goods.
But the author believes that in the long term, the fundamentals have not improved. On the one hand, textile companies will not make too much efforts to replenish their stocks. Due to the high price of new cotton and the continuous decline of yarn, the profits of textile companies have seriously declined, and they have become ready to use. On the other hand, there is only a 3-month window for new cotton sales, which is under great pressure. The weather in Xinjiang has improved, and machine-picked cotton has accelerated, leaving less and less time for processing plants to purchase. However, the current lint cotton shipments are still not smooth, and funds The return of seed cotton is slow, and the financial pressure to purchase seed cotton is gradually increasing. In the later stage, the possibility of lowering the price and removing the goods cannot be ruled out. Recently, the price difference between internal and external prices has reached a high of 2,000. If the price difference between internal and external prices is too high, arbitrage orders will inevitably suppress Zheng Cotton. In addition, the current sharp decline in viscose prices has basically reached the same level as cotton, so the pressure of substitutes on cotton prices has also increased.
To sum up, the author believes that the rise of Zheng Cotton is just a hype caused by the help of funds from textile enterprises to replenish warehouses and the resistance to transportation. However, the replenishment efforts of textile enterprises are limited and it is difficult to effectively boost cotton prices. In the end, the spot cannot keep up with futures. , it can be seen that the rise in Zheng cotton futures this time is just a “flash in the pan” and it is difficult to support it for a long time.