Oversupply of fundamentals continues to pressure cotton prices

Under the support of consumer buying overnight, ICE cotton futures generally rose sharply, and the main force closed higher for the third consecutive trading day in May. The settlement price for the day was 89.08 cents/lb, up 160 points. Turn; July contract settlement price of 89.90 cents / lb, up 185 points; from the volume point of view, a significant increase over the previous few days; market participants believe that the decline in the US dollar index for the recent rebound in the cotton provided some help, in addition to market expectations China’s quota increase in April will also form a support for cotton prices; however, the fundamentals of oversupply and weak consumption are still the biggest pressures for its upward reversal.

International Market: The Cotlook A Index on the 19th was 97.65 cents/lb, up 10 points. The imported cotton price index (FC Index) was 103.23 points/lb for the SM grade, up by 13 points; the M grade was 98.59 cents/lb for 12 points; and the SLM grade was 97.45 cents/lb, up by 5 points. The General Administration of Foreign Trade of India announced that it had applied for a review of the procedures for the registration of export licenses. However, due to the declining prices and time constraints, some buyers are reluctant to revise their certificates, making exporters only convert to domestic sales. India’s “spoil policy” has caused dissatisfaction among the parties.

Domestic market: The spot price of cotton remained stable. On the 20th, China's cotton price index was 19,565 yuan, a slight increase of 1 yuan from the 19th. With the temporary purchase and storage entering the final stage, the enthusiasm of enterprises to pay deposits has increased, and the daily transaction volume has remained at around 20,000 tons. As of the 19th, 2011, the cumulative transaction volume of cotton temporary storage and storage was 2,938,600 tons, and the total domestic cotton storage and storage at the end of this month Expected to exceed 3 million tons. In the news, the fundamentals of the cotton market still maintain the oversupply pattern.

Cotton secondary market: As the cotton acquisition is drawing to a close, and due to considerable profits from the deposits and futures hedging, the 400-type ginners have high enthusiasm for high-quality seed cotton and there are few remaining seed cotton resources, and the pattern of tight supply continues. Cottonseed prices form a support. The shortage of cottonseed directly led to the limited production of cotton oil, which was boosted by cost and inventory factors. The demand for cotton linters and cotton hulls was weak, and there was pressure on prices.

Related varieties: With the introduction of textile and garment data in February, the market's turmoil in the improvement of PTA demand triggered the accelerated adjustment of PTA period and the current two cities. As raw material PX prices still have room to fall, and PTA demand is weak, together with the approach of PTA's concentrated production expansion in the first half of the year, PTA fundamentals are generally bearish and adjustment pressures have increased. Judging from the recent weakness in the cotton and PTA markets, the entire textile downstream consumption situation is still not optimistic.

Matching the market: From the disk point of view, today's total opened higher across the board, the average price of all contracts rose across the board; the closing price of the main MA1204 contract returned to 20,000 mark; volume of MA1207 continue to top the list, in addition to MA1208 contract turnover below 10,000 tons , Other contracts were traded in more than 2,000 tons; technically, today's sharp rebound in the K-line form has no signs of reversal, more than a single grab rebound need to be cautious.

Zheng cotton market: From the disk point of view, Zheng cotton main 1209 contract opened higher today, unilateral down in early trading, has rebounded late, the amount of positions are reduced. On the same day, the number of Zheng cotton warehouse receipts increased by 41 to 1877, effectively forecasting 1294; technically, the average ordering pattern of the average system remains the same; warehouse receipt pressure plus downstream consumer fatigue is still the main reason for the weakness of cotton prices.

Market Overview: In the international market, some speculators' buying support has rebounded recently, but the pressure on the supply and demand market has not changed. Technically, the average system continues to be weak, so the rebound space is limited; on the domestic market, the inventory of downstream textile companies is overstocked. Still heavier, resulting in a stalemate in the cotton spot market; most companies continue to be keen to pay for deposits, but with the end of the month ending in storage, future cotton prices will face directional choices. Montenegro pointed out that on the basis of the current consolidation market and Zhengmian market, the large positions allow the two parties to face upward pressure, and the average order of the average system remains the same, so the short-term market will continue to be dominated by horizontal shocks.