Demand Factor Dominates &Nbsp; Cotton Price Is Weak For A Long Time.

The early drought in the middle and lower reaches of the Yangtze River boosted the price of Zheng cotton, and the main 1109 contract broke through the oscillation range of 24200 - 25800 yuan / ton, and the platform was 26000 yuan / ton. I believe that the current cotton The rally is hard to sustain. In the late stage, the long-term weakness of cotton prices will continue before the signs of a marked improvement in downstream demand.

Spinning enterprises Management Beset with difficulties

Since the Spring Festival, textile enterprises are busy digesting inventory, but the peak season of consumer demand is not strong. Sale Difficulties. Moreover, many enterprises' stocks are high priced cotton and high price cotton spun yarn. The prices of products and raw materials are obviously upside down, and enterprises are facing losses. China's cotton industry inventory survey report shows that the yarn inventory of the national textile enterprises increased by 13.1 days in April, the highest level since March 2009, and the inventory inventory increased by 8.8 days, the highest level since March 2010.

At present, textile enterprises are faced with many difficulties and profits are squeezed. The shrinkage of small and medium-sized textile enterprises is more obvious. First, cost pressures, raw material costs, labor costs, tight electricity and appreciation of the renminbi have led to high production costs for textile enterprises. Second, the pressure of orders, in view of the increase in costs, the competitiveness of domestic textile enterprises has declined significantly, textile export orders have been reduced by 1/3, and short lists still occupy the mainstream market. Third, under the pressure of funds, under the background of tightening state bank loans, the liquidity of enterprises is tight. The current situation of textile enterprises is the depletion of funds, the weakening of exports and the weakening of domestic consumption.

Generally speaking, downstream consumption weakness dominates the cotton price trend in the late stage, and cotton prices should really reverse the downward trend, which is very stressful.

Global cotton supply is adequate in the new year

USDA's latest data show that China's cotton production and sales data in 2011/2012 increased slightly compared with the previous year, and the supply and demand gap contracted from 3 million 592 thousand tons to 3 million 266 thousand tons. However, what we can not ignore is the global supply and demand data. The total output of cotton in the world is 27 million 155 thousand tons and consumption is 26 million 19 thousand tons, compared with the shortage of 2 million 948 thousand tons in the previous year. The cotton in the new year is not only a gap, but also an oversupply of 1 million 136 thousand tons. This pattern has laid a bad foundation for the cotton price in the later period, which restricts the rising space of cotton prices.

Focus on weather factors

The drought in the middle and lower reaches has accelerated the rebound of cotton prices. The current price has already made up for the gap in the previous period. In the middle and lower reaches of the Yangtze River, in view of the rule of long drought, the heavy rainfall will alleviate the drought. But if the rainwater weather continues in the later stage, the cotton production will be reduced, and then a short wave of rising prices will be triggered.

To sum up, although the early zhengmian 1109 contract has stood at 26000 yuan / ton pass, but there is a lack of effective coordination of downstream consumption, and the rebound space is limited. At the moment, when the shift is in place, the September contract will gradually accelerate as the funds withdraw. Overall, cotton prices will continue to be weak for a long time under the guidance of demand.