Cotton futures prices have risen rapidly since late September. The January contract was still at 17,030 yuan/ton on September 22, and once climbed to 22,960 yuan/ton on October 18, with the maximum increase of 34.8%. In this process, the factors driving cotton price increases mainly come from the supply side. The commonly known cotton refers to lint, which is a product of seed cotton processed and ginning. The purchase price of seed cotton is crucial to the pricing of lint. This year, the ginning factory has expanded its production capacity on a large scale, adding more than 150 production lines. The production capacity of ginners is severely overcapacity compared with cotton production. For seed cotton, supply is decreasing and demand is increasing, and rush to harvest during the purchasing season is unavoidable. Therefore, since the new cotton purchase season in Xinjiang started, the purchase price of seed cotton has continued to rise. The purchase price of machine-picked cotton in North Xinjiang at the end of September was less than 10 yuan/kg, but after the National Day it rose to 11 yuan/kg. Converted into lint cost, it increased from 23,000 yuan/kg. Yuan/ton increased to 27,000 Yuan/ton. The continued rise in costs will inevitably push cotton prices higher.
However, after the peak harvest of seed cotton ended, the psychology of cotton farmers changed, from being reluctant to sell at high prices to actively selling. The ginners were worried that the high purchase price would bring too much risk, so they purchased at a lower price. The price of seed cotton began to weaken since mid-October. As of October 30, the purchase price of 40 linseed cotton in Kuitun area of northern Xinjiang is 10.2 yuan/kg, the purchase price of machine-picked cotton in Kashgar area of southern Xinjiang is 10.2-10.5 yuan/kg, and in some areas of Bazhou and Aksu, it is less than 10 yuan/kg. Kilogram. The purchase price has fallen from its high level, and the January contract is also hovering between 20,500 and 22,000 yuan/ton.
Currently, the cotton market is intertwined with long and short factors.
Positive factors include: first, the futures-to-cash price difference needs to be repaired. The difference between the cost of new flowers and the futures price is about 2,000 yuan/ton. The deep discount structure of futures needs to be repaired. In the later period, it is likely that futures will move upward towards the spot price. Second, it is not easy to generate new warehouse receipts. As of October 29, there were a total of 2,188 cotton warehouse receipts, equivalent to 87,500 tons of inventory, including 1,829 warehouse receipts for 2020/2021, equivalent to 73,200 tons; 359 warehouse receipts for 2021/2022, equivalent to 14,400 tons. The current outflow rate of cotton warehouse receipts is relatively fast, and the number of warehouse receipts is lower than the levels of the same period in 2020 and 2019. However, since the cost of new cotton is about 2,000 yuan/ton higher than the futures price, it is difficult to generate new warehouse receipts, and the number of new cotton warehouse receipts will not be too large before the futures-to-spot price difference converges. Third, domestic production is expected to decrease. Due to the decline in planting area and the occurrence of weather disasters during the planting period, cotton production is expected to decrease in the new year. Data show that as of October 31, a total of 1.5306 million tons of lint cotton had been processed in China, a year-on-year decrease of 17.16%.
The negative factors include: first, the downward transmission of cotton prices is blocked. Affected by power restrictions and production restrictions, the operating rate of textile mills declined rapidly from September to October. As of last week, the operating rate of pure cotton yarn was only 58.5%, and the operating rate of pure cotton gray fabric was only 47.6%. Correspondingly, in terms of finished product inventory, the inventory of pure cotton yarn is 22.5 days, which is at the mid-to-high level in history; the inventory of cotton gray fabric is 31.3 days, which is at the high level in history. Textile mills’ new orders are poor, leading to inventory accumulation. In addition, in terms of raw material inventory, textile mill raw material inventory is 38.1 days, which is at a relatively high level in the middle of history, an increase of 3 days year-on-year. This year, the release of cotton reserves was postponed for two months. The daily release volume in October increased from 10,000 tons to 25,000 tons, and then to 30,000 tons. The supply of raw materials for textile mills is relatively sufficient, and most companies are not very receptive to high-priced cotton. Second, textile and apparel sales are expected to decline. From January to July, the single-month retail sales of clothing, shoes, hats, needles and textiles continued to grow positively year-on-year, but the growth rate converged rapidly from April. From August to September, the year-on-year growth rate turned from positive to negative, falling by 6% and 4.8% respectively. From January to September, cumulative retail sales were 964.14 billion yuan, a year-on-year increase of 20.6%, but lower than the same period in 2019. In terms of exports, from August to September, the monthly export volume of clothing increased year-on-year. However, due to the impact of front-loading overseas orders, the export growth rate in the fourth quarter may slow down. Third, the current futures price is at the mid-to-high level of the historical range. Futures prices above 20,000 yuan/ton are difficult to sustain for a long time in the later period, and there is a demand for cotton prices to rise and fall.
In general, there is pressure on the cotton market and support on the bottom. The pressure is at 23,000-23,500 yuan/ton, and the support is at 20,000-20,500 yuan/ton. In the short term, the price is expected to be Oscillating operation. In terms of operation, you can pay attention to the options strategy of shorting volatility. </p
