Most Of The Cotton In The Northern Hemisphere And The United States Has Not Yet Been Sold.

New York futures rebounded this week, and the December contract rose 169 points to 75.22 cents.

A week ago, the December contract looked as if it would collapse at any time. After December, the contract broke through the three month upward trend line. However, the announcement of the Federal Reserve has injected new excitement into the market, so the market may not collapse for the time being.

However, although the 237 point increase last Friday may be impressive, the volume is still not convincing. The average week is only about 14000 hand contracts, while the open contracts are about 182000 hands.

New buyers will enter the market, which will be constructive, but the market is mainly short of selling. Therefore, the market has gone up several cents. At the beginning of this week, the central and southern parts of the United States rained again and threatened crops.

However, at present, the whole cotton planting belt is very good and the weather forecast is very good. There are still a few days to pick cotton.

Conversely, this will start to give

Put some pressure on, because there are still a large part of the US and other northern hemisphere cotton that have not yet been sold.

Last week, the US exported 211300 standard export packages, of which China became the largest buyer again.

So far, the total number of entrustment has reached 5 million 400 thousand statistics package, compared to 6 million 900 thousand packets in the same period last year.

In other words, the sales volume is less than 1 million 500 thousand packages, but the output is expected to increase by 1 million 500 thousand packages. This means that the United States must find a home for these cotton, especially China may no longer be the largest importer.

This week, China's national development and Reform Commission announced that it would no longer increase import quotas this year.

China has obviously chosen to make up for the new cotton gap through the auction of reserve stocks instead of increasing imports.

So far, the sale of reserve cotton has just exceeded 300000 tons, or about 1 million 400 thousand statistical packages.

These sales will be suspended in September 29th. By then, there should be enough new cotton to enter the circulation channel to ensure a stable supply of the market.

This decision forced the spinning mills to use expensive domestic cotton rather than a lot cheaper imported cotton.

The factory exerts greater pressure.

However, when Chinese textile mills find it more and more difficult to participate in international competition, the textile factories in other parts of the world will benefit from it, whether it is higher profits or larger market share.

So, where should we go? Although we have noticed that the long-term bullish suggests that central banks are printing money without restrictions, we also assume that the cotton planting area will decrease significantly next year. Therefore, we are still not optimistic about cotton prices in the next 2-3 months.

There are too many negative factors in the market. From now on, prices will go down.

Chinese buyers still do not enter the market. There are 400 price differentials between the December 2012 contract and the December 2013 contract. What can new cotton shippers do at this time?

Inventory, waiting for better opportunities, does not sound like a successful strategy.

If we can replace cotton sales, stop holding positions and buy relatively cheap bullish arbitrage and take part in the rising market, why are we risking a loss of 10 cents in a possible down market and paying the position fee? In addition, the US dollar is strong, and soybean and corn prices are somewhat weak. Under such circumstances, the market can not help the bulls.

Therefore, we believe that as long as the new cotton bags are stacked up in the warehouse, there should be some sell-off pressures in the spot and futures markets.

The spot market can only digest the limited quantity, because the textile factory adopts the policy of buying and selling now, which means that most of the sellers will have to turn to the futures market to find price protection.