Last Friday, Zheng cotton once hit the lower limit, and the main CF2209 contract that day fell to 13,560 yuan/ton. On Monday, Zheng cotton rebounded from an oversold, and the main contract was sealed at the daily limit. For two consecutive trading days, cotton prices rose and fell by more than 1,000 yuan per ton. However, the industry has not yet had time to get out of the “shock”, and Zheng Mian once again started a deep decline mode on Tuesday. As of noon on the 19th, the main September contract fell by more than 1,000 yuan, and spot cotton purchases and sales basically stagnated. The recent price fluctuations of Zheng cotton futures have been excessive, which has had a significant impact on both the upstream and downstream of the cotton textile industry.
Judging from the downstream textile market survey results, textile companies in Shandong, Jiangsu and other places have reported that gauze product inventories are generally accumulated. In order to alleviate financial pressure, most companies have been forced to suspend production or reduce loads to relieve production pressure. There are many factors causing the current situation: On the one hand, under the expectation of global economic recession, orders for textiles and clothing in European and American countries have slowed down, causing export orders to shift from “long orders, large orders” to “short orders, small orders”. Domestic downstream textile enterprises The influence of sales-based production-determination gradually extends to raw material cotton, causing short-term cotton demand to shrink; on the other hand, textile consumer countries represented by Europe and the United States boycott Xinjiang cotton products, making domestic companies unable to make a clear judgment on the future production situation, and they are indecisive. This leaves some production capacity “idle and paralyzed.”
According to the investigation of midstream cotton-related trading companies, futures have fluctuated significantly, the epidemic situation has changed repeatedly, and cotton companies have been under great pressure to pursue insurance and cargo shipments, making it difficult to carry out normal spot transactions. In the early stage, Zheng cotton broke through and fell, and some basis spots were traded in large volumes. However, the downstream mentality became more cautious and the number of pending orders shrank, resulting in the basis spot and fixed-price transactions shrinking rapidly.
Judging from the current situation of upstream ginning production companies, during this round of decline, the cumulative decline in cotton prices has exceeded 8,000 yuan/ton, and the lint processing cost of Xinjiang ginning companies is generally more than 23,000 yuan/ton. Therefore, most manufacturers have experienced floating losses of more than 10,000 yuan per ton of cotton. The recent sharp fluctuations in Zheng cotton have made companies suffer and panic.
In the investigation, both downstream textile companies, midstream and upstream trading companies and ginners all said that Zheng cotton fluctuated significantly. End companies were unable to place orders, textile companies were unable to receive orders, and traders and manufacturers were unable to ship goods smoothly. Therefore, expecting Zheng cotton futures to stabilize is the common expectation of current industry players, and the wait-and-see sentiment will be maintained in the short term.
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