Why Will The Spot Cotton Prices Fall Sharply In The Domestic Market?

Nearly two trading days, Zhengzhou

There has been a continuous fall in the price.

At the same time, domestic spot cotton prices and

The average price of the round out paction also showed signs of weakness.

In cotton

With the normal operation of the price pmission mechanism, the strengthening of the international cotton prices and the severe shortage of domestic cotton production in the new crop year, why will the domestic spot cotton prices fall sharply?

"Cotton prices suddenly declined sharply this year, mainly due to the decision of the relevant agencies to extend the selling time of cotton reserves."

Zhou Wenke, research director of the earth futures research and development department, told reporters that at the end of last week, relevant agencies held a meeting on the issue of reserve cotton sale and decided to extend the sale time of cotton reserves for one month, that is, to extend to September 30th.

After the news spread in the market, cotton prices immediately responded.

According to the reporter, since April this year, stimulated by the strong growth of the downstream demand of cotton, coupled with the substantial rise in cotton prices in major cotton producing countries such as India and the United States, the spot cotton prices continued to rise in the domestic market. Among them, the 1701 contract price of zhengmian main force rose 6000 yuan / ton in 3 months.

During this period, although the reserve cotton sold about 30 thousand tons a day, it still could not meet the market demand. The market looked forward to increasing the selling amount of cotton reserves or extending the selling time, so as to prevent the market from worrying about the interruption of supply and reduce the probability of a sharp rise in the price of the new cotton market.

Zhou Wenke believes that the extended sale period of reserve cotton can increase the market supply of about 600 thousand tons, which is undoubtedly a welcome news for the cotton textile enterprises wishing to increase the output of cotton reserves, which not only guaranteed the raw material procurement, but also avoided the rise in prices.

"However, judging from the recent double high prices of cotton yarn and grey cloth in the downstream cotton products, the negative impact of the extended cotton sale time on cotton prices is only temporary. Under the current market supply situation is still tight, cotton prices will return to the rising track."

In the exchange with some cotton traders, the reporters found that cotton enterprises had strong bullish mentality. The main reason is that the domestic cotton market can not circulate enough resources at present, and the demand for cotton in downstream cotton enterprises is mainly dependent on the selling of cotton reserves. At the same time, the cost of importing cotton and imported cotton yarns is too high to replace domestic cotton and cotton yarns in large quantities, while in the international market, cotton prices remain strong, plus the lack of domestic cotton production in the new crop year.

According to the China Cotton Association survey, cotton planting area was 41 million 296 thousand mu this year, a decrease of 10.1% over the same period last year.

By the end of June, the cotton bud rate was 83.85%, which was 10.3 percentage points higher than that of the same period last year. The overall growth of cotton is worse than that of last year. The comprehensive climate suitability index of cotton growing areas in China is "more suitable".

The output of cotton depends on the weather conditions in 7 and August. If the weather conditions are better, the yield per unit area will be higher than expected.