In the past week, the market price of Zheng Cotton CF2109 contract once again fell below 15,500 yuan/ton. The competition range between long and short parties fell back from 15,500-16,000 yuan/ton to 15,000-15,500 yuan/ton. During the same period, the main ICE contract held at 82 Cent/pound key points.
From the survey, some small and medium-sized cotton textile enterprises have entered the raw material replenishment cycle, which has played a supporting role in Zheng cotton’s operation at 15,300-15,500 yuan/ton. Cotton spinning mills and cotton traders in Henan, Hubei, Jiangsu and other places generally said that the Zheng cotton CF2109 contract fell to about 15,300 yuan/ton, which was somewhat beyond expectations, so they have increased their efforts to replenish cotton spot stocks.
The author judges that the main price of Zheng cotton at 15,000-15,500 yuan/ton is a good opportunity for cotton spinning companies to enter the market and get goods. The following factors will boost the rebound of Zheng cotton from June to July:
First, the economic recovery has brought about the recovery of demand, the supply bottleneck effect caused by repeated epidemics and the loose monetary policies of most countries will support the continued high consolidation of commodity prices;
Second, China-US economic and trade dialogue has made new progress, and relations have shown signs of easing. On the morning of May 27, Liu He, Vice Premier of the State Council and the Chinese leader of the China-US Comprehensive Economic Dialogue, had a phone call with US Trade Representative Dai Qi. Both sides believed that the development of bilateral trade was very important, exchanged views on issues of mutual concern, and agreed to continue to maintain communication. This is the first phone call between leaders in the economic and trade field between China and the United States after August 25, 2020;
Third, Chinese cotton textile and clothing companies are still receiving orders smoothly. At present, the epidemic in Southeast Asian countries including India, Bangladesh, Vietnam, etc. is still in a concentrated outbreak period. There is a high possibility that orders from Europe, the United States, and Japan will overflow again in the second and third quarters, and the domestic sales market will usher in the peak season from August to September;
Fourth, there is still uncertainty about the weather in Xinjiang cotton areas in 2021. Judging from the survey, as of the end of May, cotton seedlings in most cotton areas in Xinjiang are growing slowly and the fertility process is lagging. In addition, some areas have been affected by disasters and have replanted early-maturing cotton varieties or other crops. In 2021/22, Xinjiang’s cotton planting area and yield will not optimism. Once extreme weather occurs from June to July, market speculation will be ignited. </p
