Recently, Zheng cotton has maintained an upward and strong trend, and the CF2205 contract has continued to hit new stage highs. There are still two weeks until the Spring Festival holiday. Since the Spring Festival coincides with the Winter Olympics, the market may show a different trend after the holiday.
A cotton trader told the author that the production of downstream companies is now basically normal. Companies that have reserved cotton stocks in the early stage still have a certain profit margin for cotton yarn. The market is not as pessimistic as expected. Faced with the urgent need to replenish their stocks before the holiday, some companies have begun to purchase Xinjiang cotton from inland warehouses, and the sales situation of new cotton has improved.
After the Spring Festival, it is usually the traditional peak season for production and sales. In the past, the cycle went back and forth, but this time the situation may be different. It is understood that some areas in Shandong have begun to require companies to suspend operations for 20 days in February and March. The specific reasons need not be elaborated. If the Spring Festival holiday is added, the total shutdown time will last for about two months. This will have a considerable impact on demand. Of course, this is only a temporary notice, and the specific implementation efforts have yet to be verified. As for whether the areas where shutdown measures will be expanded, there is currently no relevant information.
Now downstream companies are still producing in an orderly manner, and orders and profits have improved compared with the previous period. As low-price reserve cotton raw materials are exhausted, corporate production costs will also rise. Although yarn prices have also increased a bit, compared with high-priced cotton, spinning profits are low, and spinning companies are in a passive position. There is uncertainty about whether cotton prices can be smoothly transmitted to the downstream. The early transmission was not smooth because market traders and weaving mills still have a lot of low-priced cotton yarn stocks. At the beginning of December, the market was pessimistic. In order to reduce inventory control risks, they were destocking at low prices, which led to strong resistance from downstream customers to yarn price increases. After all, when low-priced yarns can be purchased, no company is willing to pay high prices. yarn. As the inventory of low-priced yarns in the market declines, it is expected that the resistance to yarn price increases after the holidays will decrease. After all, the market will be full of high-priced yarns and there will be no choice.
Generally speaking, the fluctuation range of futures prices will decrease as the Spring Festival approaches. Zheng Cotton is on this track. However, there is uncertainty in demand after the Spring Festival. Whether the traditional peak season can become justified remains to be verified by the market. If the demand is not as good as expected, the high price may be weak and volatile, otherwise the high price may be strong.
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