[Webbing Network] Zheng cotton futures price stabilized at the previous low 24130 after being strongly supported, recently oscillated in the range of 24200-25800, it is expected that the oscillation trend will remain weak in the later period.

    No shortage of cotton supply in 2011/12

    Data show that China's cotton commercial inventory in April was 2.56 million tons (including foreign cotton and cotton in circulation), the national cotton storage inventory was 300,000 tons, and the total inventory was 2.86 million tons. According to estimates by major international cotton institutions, China's cotton imports this year will be 2.7 million to 2.8 million tons, and about 2 million tons will be imported by April, and there will be about 700,000 tons of cotton imports in the later period. The supply is about 3.56 million tons. As of April, China's total cotton consumption was 6.8 million tons. According to the US Department of Agriculture's report, China's 2011/12 cotton consumption was 10.233 million tons, and it will consume 3.433 million tons later.It can be seen that without surplus cotton stocks, the cotton supply has just been able to meet the later cotton demand. Considering the situation in India, cotton prices in India have been declining recently, and have fallen by nearly 30%. Worker strikes have caused downstream textile companies to make matters worse. Cotton farmers hope to increase export quotas and increase the selectivity of China’s cotton imports, which may be further eased. The situation of tight supply in the early stage.

    Insufficient global cotton demand

    The US Department of Agriculture's cotton export data released on May 19 showed that the actual sales of cotton for the week were -86,600 bales, and a large number of orders were cancelled. Among them, China’s net contract amount for US upland cotton was -9979 tons. The overall situation of cotton in other major producing countries such as India and Pakistan has already passed the tense period, and cotton prices in different countries of the world have fallen more or less.

    The downstream export situation is grim

    According to statistics, from January to March, the comprehensive profit of textile enterprises above designated size nationwide was 5.14%, while the profits of small and medium-sized textile enterprises were even lower. Against the backdrop of the ongoing appreciation of the RMB, the textile and apparel situation is facing severe challenges. As of May 17, the RMB appreciation rate reached 1.67% in 2011. At the 109th Canton Fair, most companies did not dare to take long orders, and generally chose to take short orders. Short orders accounted for 90%, and long orders accounted for 10%, indicating that buyers still have doubts about the market outlook and place orders with caution.

    According to statistics from the General Administration of Customs of China, total exports of textiles and apparel from January to March reached 49.866 billion yuan, a cumulative increase of 23.68% year-on-year, and the growth rate increased by 8.24% over the same period of the previous year. From the data alone, China's current textile and apparel situation is acceptable, but from the decomposition of China's textile and apparel export value index, due to the substantial increase in cotton prices from January to March 2011 compared with the same period in 2010, the price has increased in textile and apparel The contribution rate of exports is actually lower than that of exports.

    Based on the above analysis, it is difficult for Zheng Mian to start rising prices in the later period. Unless the spot price stabilizes for a period of 24,000-25,000 yuan/ton, it is possible to increase the confidence of market investors. If the market price of cotton oscillates between 24200 and 25800, the overall trend is weak. In terms of operation, investors are advised to go back to 25800 first-line tentative shorts, and the price drops to 24200 first-line entry.