Industrial Chain Stalemate Restricts Zheng Cotton Trend, Investors Need To Continue To Be Cautious.

In the past two months,

1301 the contract has been running under the 5 week average.

Although the recent market was boosted by the news that India raised the minimum purchase price of seed cotton in the next year, it once rebounded, but Zheng cotton's 1301 contract still failed to stand on the 5 week average line effectively, showing a sharp fall.

On the basic level, the cotton price of upstream and downstream is greatly upside down, which leads to the attractiveness of domestic cotton, and the weakening of downstream consumption restricts the strengthening of cotton prices.

Therefore, before the break of the domestic cotton industry chain impasse, we suggest that investors continue to be cautious about Zheng cotton.

Upstream seeks price fixing

Recently, domestic and foreign cotton prices once again entered a big upside down level.

Take India cotton as an example, in June 25th, the port pick-up price of India cotton (excluding tax) was 12968 yuan / ton, while domestic real estate cotton price was 18279 yuan / ton, and the internal and external upside down was 5311 yuan / ton.

This means that even if traders import 40% of the total tariff mode, India cotton is still cheaper than real estate cotton 124 yuan / ton.

If the difference between domestic and foreign cotton prices continues to expand, it may attract more domestic buyers.

In addition, some domestic enterprises are unable to bear the high priced real estate cotton and suffer from the limited import quota of cotton. They turn their attention to the import of cheap cotton yarn and cotton cloth.

According to the latest statistics of customs, imports of cotton yarn and cotton cloth continued to expand in May 2012.

Among them, the import of cotton yarn in May was 125 thousand tons, an increase of 14.75%, an increase of 141% over the same period last year. In May, the import of cotton cloth was 83 million meters, an increase of 7.16% in the ring ratio, an increase of 33.85% over the same period last year.

It is expected that cheap imported cotton, cotton yarn, cotton cloth and so on may again pressure the domestic spot market.

From the perspective of demand, the terminal consumption of textile and clothing is not ideal.

In terms of exports, China's textile and clothing exports increased by 7.35% over the same period in May 2012, but the growth rate dropped by 16.41 percentage points, and less than 8.7% of the total social export growth.

Therefore, it is not yet clear that the export situation of textile and clothing is reversed, and the sustainability of export growth rebound still needs to be observed.

At home, data from the China National Business Information Center show that in May, the retail sales of clothing commodities of all the major retail enterprises in China increased by 12.16% over the same period last year, while the volume of retail sales increased by 1.34% over the same period last year. However, the volume and volume growth rate were not as good as that of the same period last year.

According to past years, textile and clothing terminal consumption is expected to start in 7 and August. Therefore, we recommend investors to pay attention to late demand performance.

Once the peak season is not prosperous, the probability of maintaining the disadvantage of Zheng cotton later is larger.

Warehouse receipt problem affects Zheng cotton trend

From the perspective of futures, the digestion of warehouse receipts may continue to affect the trend of Zheng cotton.

Although the number of warehouse receipts in Zheng cotton is still large, it is more advantageous that the warehouse receipts show a slow outflow situation in recent months, or help to alleviate the pressure of delivery in recent months.

As of June 25th, the effective forecast of Zheng cotton warehouse receipt was 126 thousand tons, down 16% from the end of 5.

But at the same time, we must also see that the warehouse receipt is a double-edged sword. When the contract price in recent months is shifted from the premium to the premium, the digestion of the warehouse receipt may be suppressed.

From a technical point of view, the daily average of zhengmian 1301 contract has converged and may be faced with the direction of short-term choice.

Taking into account the large internal and external upside down, downstream demand is more

And warehouse receipts and other factors, we believe that Zheng cotton temporarily do not have the conditions of strength, and later may continue to show the trend of bottom finding.