In October, cotton purchasing companies in Xinjiang continued to open scales, and the number of contracted factories decreased. The expected grabbing phenomenon did not appear. The purchase price fell slightly. The Zhengmang 1901 main contract fell to a minimum of 15,260 yuan/ton. Although the pressure on the top is relatively high, there is still support for consumption below. Zheng cotton will continue to fluctuate in the near future, and the decline below is relatively limited.

After the warehouse receipt moves back, the pressure remains.

Zheng cotton 1809 contract has completed all delivery procedures. According to the data released by Zhengzhou Commodity Exchange, since entering the delivery month, Zheng cotton warehouse receipts have been cancelled 527, and the effective forecast has been cancelled 175, a total of 702, accounting for 6.14% of the market generated warehouse receipts. In other words, more than 93% of warehouse receipts did not flow out of the market. As of October 15, the Zhengzhou Commodity Exchange has accumulated 9,952 warehouse receipts, equivalent to 338,680 tons.

The main reason for the continued circulation of these warehouse receipts is the increase in the spread between the previous 1809 contract and the 1901 contract. From the current warehouse receipt structure analysis, since August 1st, the 2017/18 warehouse receipts have begun to be discounted, which makes the warehouse receipt holders more willing to sell the real cotton and low grades on the 1809 contract. Xinjiang cotton that rises in water, and for Xinjiang cotton with higher water, its premium and profit can cover the 9-1 position cost, and the warehouse holder is more willing to sell it at the 1901 contract.

The pressure on the Zheng cotton 1901 contract is not only the pressure of the old warehouse receipts. According to the survey of Xinjiang, the increase in production in Xinjiang in 2018/19 is basically a foregone conclusion, with a production of about 520-5.4 million tons. In order to ensure a smoother warehouse receipts for new cotton in Xinjiang, Zhengzhou Commodity Exchange has relaxed the registration warehouse receipts in Xinjiang while adding a delivery warehouse. This makes the pressure of the new warehouse receipts in 2018/19 not to be underestimated. The pressure on the new and old warehouse receipts will be reflected in the contract of Zhengmian 1901. Zheng Mian's firm pressure is relatively heavy.

Supply and demand report is good, the gap is not as expected

On October 12, the US Department of Agriculture released the monthly monthly supply and demand forecast report. For the second consecutive month, the US production forecast for 2018/19 was increased to 4.303 million tons, and the global production forecast was reduced by 68,000 tons to 26.48 million tons. The global consumption forecast for 2018/19 is reduced by 40,000 tons to 27.816 million tons. The supply and demand gap is estimated to increase 28,000 tons to 1.328 million tons from last month. Affected by the sharp decline in ending stocks in India, the global ending stocks for 2018/19 were lowered by 657,000 tons to 16.209 million tons. In addition to China's 2018/19 year, the oversupply was 1.938 million tons, a decrease of 28,000 tons from the previous month's estimate. Therefore, it can be seen from the above data that the global supply and demand gap mainly comes from the Chinese region, and the regions outside China are still in an oversupply stage.

Although there is a gap between supply and demand in the domestic market, macroeconomic regulation and control will continue to exist in the market. According to historical data, China has been in a state of short supply for many years, and the gap between supply and demand is made up of reserve cotton. After continuous reserve cotton release, China's reserve cotton stocks have fallen to near the margin of safety. At the same time, in 2019/20, the state may gradually implement subsidies for cotton planting in the Mainland, and a variety of macro-control measures will be implemented jointly to avoid damage to the real economy caused by large changes in cotton prices in China. The market's expectation of Zheng cotton supply and demand gap is not clear.

Below is supported by consumption.

Despite the pressure, the support under Zheng cotton is also very strong. Cotton yarn stocks continued to decline. According to data from Huarui Information, cotton yarn stocks of textile enterprises have been falling for two consecutive months from August 3 to September 21. At the same time, the profits of textile enterprises are also very considerable. Due to the high price of imported cotton yarns, the impact on the domestic cotton yarn market has weakened. As the price of PTA has gradually increased, the prices of polyester staple fiber and viscose staple fiber have also risen, which further supports the domestic cotton yarn price and consumption. .

It can be seen from the survey of the operating rate that the situation faced by textile enterprises this year is not weak in the off-season. Taking textile enterprises in Henan as an example, large-scale textile enterprises can basically guarantee full-scale construction and promote domestic cotton consumption.

From the outflow rate of the warehouse receipts in the futures market, it can be clearly seen that the current price of Zhengm's main contract 1901 is around 15,500 yuan/ton. The price inquiry is positive, the outflow rate of warehouse receipts is faster, and the volume is increased. This indicates that downstream consumption is strong.

Long and short factors interweaving Zheng cotton is difficult to bull market

As can be seen from the current data, as of the end of September, domestic cotton social inventories totaled 2,503,900 tons. At the end of October, new cotton will be listed in large quantities, and social supply will increase again. For the current domestic consumption of 750,000 tons per month, there is no gap between supply and demand before the launch of new flowers. At the same time, according to the Xinjiang fixed-production survey data, the Xinjiang region has a high probability of increasing production in the new year. Although the consumption data is considerable, Zheng cotton still needs time to digest the current inventory. In summary, looking forward to the Zhengmian bull market in the context of firm pressure and consumer support, it is still too early, the overall macro instability is also a major pressure on commodities, Zheng cotton will continue to maintain the shock trend , change space with time.