Cotton Futures Market Shock Intensifies Spot Market Hold Out

Since February 25, the main CF1905 contract of Zheng Mian Futures has been fluctuating between 15200 yuan and 15400 yuan/ton. The main reason is that, on the one hand, there is a lack of strong support from the fundamentals. On the other hand, as the delivery period approaches, investors turn their attention to the CF1909 contract. On March 4, the main force of ICE futures 1905 contract fell by nearly 1%, and then rebounded to rise by nearly 2% the next day. The internal and external markets fluctuated sharply, which made the domestic market emotional and the wait-and-see mentality of the industry increased. However, the recent performance of the spot market is different.

First of all, recently, the number of inquiries in Xinjiang has been increasing steadily, the price of machine picking cotton has risen in the early stage, and the price focus of pulling hand picking cotton has also moved up. According to the survey, with the increase of cotton storage costs of enterprises in Xinjiang, as well as the increase of loan interest over time, and the increase of hidden costs of ginning plants, cotton merchants are determined to support prices, and their resistance to low prices has increased significantly. In addition, with the arrival of spring, some mills have opened a new round of replenishment, and customers' expectations of the market have increased. At present, the mainstream price of gross weight of cotton picked by "Shuang 28" machine in Xinjiang is 15600-15700 yuan/ton, and the mainstream price of gross weight of hand picked cotton picked by "Shuang 28" machine is 15800-15900 yuan/ton. Some producers refuse to make inquiries for more than 50 yuan/ton. Of course, this is also related to the purchase of high-quality Xinjiang cotton registered warehouse receipts by some Xinjiang domestic traders. Ginning mills pledged or resold high-quality lint to ease capital pressure, resulting in a decrease in the remaining "Double 29" or above spot surplus. Therefore, it is "natural" for the ginning plant to sell at a high price.

Secondly, it is difficult for ginning enterprises in the mainland market to purchase seed cotton and maintain the processing quantity of lint cotton. In the dilemma of acquisition and processing, cotton merchants expect to raise cotton prices and obtain high profits from limited resources. The improvement of the cost performance ratio of imported cotton prompted some mills to shift their raw cotton procurement to imported cotton, especially textile enterprises in Shandong, Hebei and other regions to actively use import cotton quotas for customs clearance. It is estimated that if the quota is used to purchase imported cotton, nearly 1000 yuan can be saved per ton compared with the direct purchase of RMB spot cotton. Therefore, the recent transactions in the port cotton market show a hot situation, and the port cotton merchants are optimistic. According to the feedback, there are many customers who come to the port to inquire about goods every day in the near future. If the external market can rebound to a certain extent, the spot will surely rise rapidly.

With the arrival of the traditional peak season of "three gold and four silver", whether the cotton market is warming up as scheduled still needs to continue to pay attention to the changes in the overall supply and demand of the market. At present, the mentality of the upstream is becoming stronger, and the downstream continues to keep a cautious wait and see. The high commercial inventory of cotton cannot be ignored. The two sessions of the National People's Congress and the China US trade negotiations or the signing of relevant "agreements" may break the long silent cotton market.