In 2019, the cotton market is "good"? Judgment needs caution

Recently, the whole cotton market has become more and more bullish, cotton people have suppressed the depression for nearly half a year and gradually found a breakthrough. Some futures companies and institutions held cotton forums and peak seminars. In 2019, the voice of cotton bullish has completely taken the upper hand. Some Cotton Traders in Xinjiang and the Mainland & ldquo; biding & rdquo; preferring not abusive gambling market & ldquo; & rdquo; Operation is not uncommon. & ldquo; issuing import quotas, lack of cotton in the international market; not issuing import quotas, lack of cotton in China & rdquo; has become the consensus of the entire cotton industry and investors.
Why do most people think that the cotton market will emerge in 2019-ldquo; big move-rdquo? Some institutions believe that the Sino-US negotiations will soon reach a consensus, sweeping away the panic and haze caused by the trade war, the global and China's monetary policy has changed (from “ robust-rdquo; to “ moderate tightening-rdquo; transition), coupled with a series of stimulus measures such as benchmarking and tax reduction, commodity futures rebound. As a result, the domestic cotton market has changed from “ top to bottom ” to “ bottom to bottom; top to open ” gradually.
But in this wave is higher than a wave of & ldquo; rising voice & rdquo; the author's worries are getting worse and worse, until mid-late May 2018, & ldquo; big market & rdquo; May 2019 can also come as scheduled? Do not worry about breaking the appointment? 2012-2018, of which May 2013, May 2015, May 2016, May 2017 and May 2018 all ushered in a round of rising prices, except in 2012 and 2014, Zheng. Cotton rose from 900 to 4800 yuan per ton, with a larger increase in May 2018. In other years, most of the increase was concentrated between 1000 and 2000 yuan per ton. Although there is a market, it is not ldquo; big action rdquo; violent pull-up.
Why don't I think cotton prices in 2019 have a chance to make big profits? The reasons are as follows: the same factor, of course, is ldquo; fair and reasonable, mother-in-law is reasonable & rdquo; the phenomenon is widespread, but we have different perspectives, different standpoints, multi-bull and multi-bull analysis, short-bull theory, which side is very difficult to convince, can only self-help. After all, the market is not wrong, but the individual is wrong.
Firstly, in 2019, the cotton planting area in China will continue to increase. Although the per mu income of cotton farmers in Xinjiang and the mainland in 2018/19 is lower than that in 2017/18, if we compare the income of maize, wheat and other crops with that of cotton, we will find that cotton is still a stable and benefit-preferred variety, coupled with the policy orientation of the Xinjiang government (re-mentioning & ldquo; building a high-quality cotton base & rdquo;), so unless the weather is real in March/April/May planting period. In the “ not to force ” otherwise, in 2019, the reason for China's cotton planting area has not been reduced, especially in the southern Xinjiang, the machine picked cotton will continue to “ and &rdquo will be promoted.
Second, in 2018/19, domestic cotton supply and demand speculation space is not large, harvest as soon as good as possible. First, since 2018, China's cotton imports have shown a growth pattern of & ldquo; blowout & rdquo. According to statistics, as of January 2019, China imported 875,500 tons of cotton in 2018/19, an increase of 83.58% (of which 280,500 tons were imported in January, an increase of 109.6% compared with the same period in January, and the growth rate in February, import and year-on-year is also expected to be considerable); secondly, whether the Sino-US trade consultation finally included cotton on the list of purchasing American agricultural products in China, and whether American cotton entered the Chinese market for domestic cotton. Thirdly, Xinjiang cotton production in 2018/19 is much higher than expected, and domestic commercial stocks are not low, short-term speculation is lack of conditions. According to statistics, as of March 14, Xinjiang cotton has been processed 5.119 million tons in this year, and the quality and grade of cotton have been significantly improved compared with the previous year; the commercial stock of cotton in February was 4.565 million tons, down 283,400 tons from the previous month, which is still on the high side; in addition, in 2019, the reserve of Cotton & ldquo; fact & rdquo; the rotation has been delayed, but the possibility of cancelling the dumping is not very high. Considering that there are still more than 2.8 million tons of medium and low quality cotton in the national storage, speculative forces are very cautious to enter the market.
Third, the commodity futures rebound is difficult to say smoothly. Whether cotton and cotton yarn consumption can effectively recover needs to be observed. Firstly, with the slowdown of the Fed's interest rate increase and the announcement of the Federal Reserve Chairman that it will be & ldquo; soon & rdquo; the announcement of the end of the drawdown plan, there will be a certain shift in US monetary policy, with the addition of Britain & ldquo; de-Europe & rdquo; evolving into & ldquo; delaying Europe & rdquo; and the renegotiation of Sino-US trade will be postponed until April. The US dollar is expected to achieve a counter-offensive; secondly, the uncertainty of global economic recovery has increased and optimism is limited. According to Bloomberg's Ministry of Economy, global economic growth slowed sharply in 2018, falling to its lowest level since the 2008 global financial crisis. Bloomberg's latest GDP tracking indicators show that the global economy's quarterly annualized growth rate has fallen from about 4% in the middle of last year to 2%.Third, the continued appreciation of the RMB exchange rate is not conducive to the export of textiles and clothing with thin profits, and the widening of fluctuation is not conducive to enterprises to receive medium and long-term orders. From the perspective of international financial situation, with the pause of interest rate increase process in the United States, the pressure of interest spread between China and the United States continues to expand, and the depreciation of RMB exchange rate based on interest rate parity logic is expected to subside accordingly. It is expected that RMB will continue to appreciate unilaterally in the year, which is beneficial to imports and not conducive to exports.
Fourthly, Zheng Warehouse Receipt + Effective Forecast has reached a record high. This is the key to how to arrange and avoid risks. According to statistics, as of March 14, Zheng cotton warehouse receipt 17006 (+74) sheets, effective forecast warehouse receipt 3261 sheets, a total of 81 cotton11,000 tons, 800,000 tons of this pass will undoubtedly be broken through, 850,000 tons or even 900,000 tons are close at hand. After half a month or so of wandering (continuous consolidation between 770,700 and 790,000 tons), warehouse receipts + forecast again spurned a big increase. At present, Zheng's warehouse receipt plus forecast is close to the sum of 2017 and 2018, so the pressure of Zheng's firm offer is not so great. As long as the CF1905 contract breaks 15500 yuan/ton, it will attract a large number of warehouse receipts & ldquo; collapse & rdquo; type fall. There are two main ways to outflow warehouse receipts from March to August: first, the increase of spot price is obviously higher than that of futures market, & ldquo; reverse hanging & rdquo; prominent, stimulate cotton textile mills and traders to receive warehouse receipts (buyer needs to consider warehouse receipts rising water); second, the decline of futures market price is much higher than that of spot, warehouse receipt performance-price ratio is prominent, buyer takes goods into the market, and relieves pressure in Zheng period. Obviously, the possibility of one of the above situations in March-May is not very big, warehouse receipt + forecast such as & ldquo; Taishan top pressing & rdquo; and multi-headed wheezing is difficult.