Cotton prices are under pressure

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Original title: Cotton prices are under pressure

[Abstract] Domestically, the new cotton harvest entered the final stage, the picking and selling speed accelerated and both were faster than the four-year average. The new national cotton policy released a negative cotton price, but the textile and apparel export data recovered and the cotton price was high; internationally, US cotton export sales data last week hit a new high and significantly higher than the four-week average to support cotton prices, but USDA raised US cotton production and ending stocks, and raised global cotton ending stocks to put downward pressure on cotton prices.

This week, Zheng cotton rose slightly, and closed at 35 to 15705 on Friday, a decrease of 0.22%. China's cotton price index on Friday was 15,905 yuan / ton, down 44 yuan / ton compared with last week. This week, Zheng cotton basically fluctuated and supported near 15700. The new annual national cotton policy suppressed cotton prices, but for Zheng cotton, the Bollinger track has a narrowing trend, the KDJ low tends to intersect, and the weekly MACD sticks. Under the trend of RMB depreciation, it is expected that the short-term cotton price may be re-adjusted after a slight adjustment, but the cotton price near 15750 may be repeated, with the support at around 15200 and the pressure at around 16550.

Outside the plate, US cotton was in a volatile trend this week, falling 0.43 cents to 70.67 cents/lb on Friday, a decrease of 0.60%. US cotton export sales data set a new high cotton price for the year, but the US Department of Agriculture raised US cotton production and final cotton stocks. From a technical point of view, this week, US cotton in the 70-72 cents / lb range showed a sideways volatility trend, is currently the new cotton market and textile enterprises to replenish the library more concentrated period, the market is relatively tight, although the 73 cents line pressure is greater However, as the price shifts upwards, it is expected that the short-term US cotton may break slightly after the adjustment, with support at around 70.00 cents and resistance at around 73.00 cents.

Domestic influence factors

[Xinjiang picking and selling near the end] According to the national cotton market monitoring system survey data, as of December 9, the national new cotton picking progress was 98.9%, down 0.5 percentage points year on year, up 0.5 percentage points over the past four years, of which The picking progress in Xinjiang was 99.4%; the national sales rate was 89.9%, up 1.6 percentage points year-on-year, 2.7 percentage points higher than the average of the past four years, of which the progress of Xinjiang's sales was 99.3%.

Due to the sharp decline in cotton planting area, the reluctance of cotton farmers and the price fluctuations, the operation of cotton enterprises has become difficult, and the purchase of seed cotton has decreased, which has made it difficult for cotton farmers to sell cotton. The large fluctuations in cotton prices have also led to a reduction in the purchase of textile enterprises, plus the previous weather. The impact, so the early stage of cotton picking and selling in this year is slower than the same period last year. However, the speed of picking and selling in Xinjiang has been significantly accelerated, and the harvest of Xinjiang cotton has entered the final stage. The yield and quality of cotton have increased significantly, which has put pressure on cotton prices.

[Textile and garment export data improved] According to the latest statistics of the General Administration of Customs of China, in November 2016, China's textile and apparel exports amounted to US$21.623 billion, an increase of 0.76% from the previous month and a decrease of 1.63% from the same period last year. Among them, the export value of textiles (including textile yarns, fabrics and products) was US$ 9.030 billion, up 4.18% year-on-year; the export value of clothing (including clothing and clothing accessories) was US$ 12.593 billion, down 5.41% year-on-year. From January to November 2016, China’s textile and apparel exports totaled US$239.557 billion, down 6.73% year-on-year, of which textile exports totaled US$96.01 billion, down 3.71% year-on-year; apparel exports totaled US$143.565.23 billion, Decrease by 8.65%.

Despite the continued depreciation of the renminbi, China’s exports of textiles and apparels rebounded slightly in November, with a large increase in exports of textiles (including textile yarns, fabrics and products), which boosted cotton demand and supported cotton prices. The first stage is affected by industrial upgrading and transfer. At present, the focus of low-end yarn manufacturing has gradually shifted to Southeast Asian countries, while the advantages of high-end yarns are still concentrated in China, and cheap imported yarns have also formed a certain substitution effect on domestic cotton imports, but new In the early period of the year, due to the tight supply of cotton, the increase in cotton prices in various countries led to an increase in cotton yarn prices. As a result, the price difference between domestic and foreign cotton yarns narrowed, and the import volume of cotton yarn decreased, which was good for domestic cotton demand and bullish cotton prices.

Warehouse receipts: The number of warehouse receipts has increased significantly

According to the warehouse receipt data from the Zhengzhou Commodity Exchange, the number of warehouse receipts this weekend was 805, an increase of 137 compared with the previous weekend, and the effective forecast continued to increase, so the total warehouse receipts and effective forecasts increased significantly.

Foreign influence factors

[US export sales record high] The US Department of Agriculture report shows that from November 25 to December 1, 2016, the net contracted volume of US cotton exports in 2016/17 was 91,900 tons, a record high, a sharp increase from the previous week. Compared with the previous four-week average, it increased by 93%. The new contracts were mainly from Vietnam (23,400 tons), Turkey (16,900 tons), China (13,800 tons), Japan (13,200 tons) and Bangladesh (11,400 tons). The shipment volume was 52,100 tons, a record high, up 75% from the previous week and 85% from the previous four-week average. As of December 1, the 2016/17 US cotton net contract amount reached 1.738 million tons, completing USDA. The export forecast was 66%, up from 54% in the same period of last year, an increase of 644,300 tons, an increase of 59%. The US cotton shipments totaled 679,500 tons, completing 26% of the USDA export forecast, up from 21 in the same period of last year. %, an increase of 258,500 tons, an increase of 61%.

Last week, US cotton export sales reached a new high, significantly higher than the four-week average, and China's purchases are still hot and added by Vietnam, Turkey and other countries. Recently, US cotton export sales continued to be hot, supporting cotton prices continue to rise, but exports to China accounted for a large part, mainly because of the existence of domestic and foreign cotton price differences, and second, the 1% tariff quota should be at the end of December this year or It is used before the end of February next year, which has led to the growth of US cotton imports in recent days, but China’s import quota is limited, and cotton imports from major cotton-consuming countries such as Vietnam and Turkey will also follow the global cotton-producing countries. New cotton is gradually listed and gradually reduced. US cotton will gradually compete with Indian cotton, West African cotton, and Australian cotton. Therefore, the rising momentum of US cotton is not strong, and there is downward pressure on cotton prices.

[USDA raises global ending stocks] According to the US Department of Agriculture's December global production and demand forecast, compared with the previous month, US cotton production increased in 2016/17, domestic cotton consumption decreased, and export volume and ending stocks increased. Globally, due to the increase in production in Australia, the United States and several other countries, consumption in India, the United States and South Korea has been reduced, consumption in China and Vietnam has increased, and global production and ending stocks have increased in 2016/17.

USDA continued to increase US cotton production to 3.598 million tons, raised Australian production by 109,000 tons to 980,000 tons, and global cotton production to 22.659 million tons; raised China and Vietnam cotton consumption but lowered Indian and US consumption (Aiji, net worth, The amount of global consumption was slightly reduced by 17,000 tons to 24.366 million tons, so the global ending stocks were slightly raised by 183,000 tons to 19.409 million tons. In 2016/17, global cotton production in the world generally increased. The high yield of cotton in Texas made the US cotton production continue to increase. The decrease in cotton exports from India and Brazil led to a significant increase in US cotton exports, but the global ending stocks increased, except for China. Continue to pick up, although in the global destocking cycle, cotton prices should be in the rising channel, but due to China's tax quota policy restrictions, it will put some pressure on the rise in cotton prices.

CFTC non-commercial position: record high position

The market continued to speculate on the bad weather conditions in the main cotton producing areas of the world. The net long position of the ICE cotton fund rose rapidly from the low point in March to the highest level in eight and a half years. Then the net long position of the fund fell slightly. At present, the fund's net long position has continued to increase to a record high for three consecutive weeks, and the market is optimistic about the new year's cotton price.

to sum up

The new cotton harvest in various cotton areas in the country is coming to an end. As the spring orders will be made next year in November and December, it is the peak season for cotton demand, coupled with the consumption of stocks in the previous period, the demand for replenishing of textile enterprises will continue, and the export data of textiles will be better. Cotton demand supports cotton prices. However, the current capacity of Xinjiang has gradually improved. The announcement of the national reserve policy in the new year provides protection for the supply of cotton in the market. The purchase of enterprises on demand has restricted the upside of cotton prices. In addition, the use of tariff quotas within the internal and external price gap will undoubtedly increase the downward pressure on cotton prices. For the global cotton market, USDA raised global cotton production and ending stocks of bearish cotton prices. This year, cotton production in various countries is generally higher than last year. Except for China, the global production and demand pattern has changed, from the previous year’s production shortage to production exceeding demand. Global cotton stocks continued to decline, but China’s cotton import quota system has constrained cotton price increases. At present, under the influence of the national reserve cotton policy and commodity volatility, cotton prices continue to fall, but after a small adjustment in the market, it is expected that the short-term trend will remain strong, but the market around 15750 may be repeated, while the medium-term still has downward pressure. The support is around 15200, but it is bought on the right bargain. (Nanhua Futures Li Honglei Wan Xiaoquan)

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