On January 18th, commodity futures funds flowed significantly into cotton.
On January 18th, the main cotton contract surged by 2.06%, up 320 yuan, and closed at 15890 yuan/ton. Compared to 15600 yuan/ton on the first trading day after the holiday, it increased by 290 yuan/ton.
The increase in cotton holdings today is mainly due to:
(1) Pre holiday restocking, continuous improvement in downstream demand margins, rebound in operating rates of textile enterprises, continuous decline in finished product inventory, and optimistic market sentiment. On the industrial side, there is a short-term improvement in demand, with an increase in textile orders before the holiday. The main cotton contract broke through the annual line during the day, rising by 15800 points
(2) Cotton processing enterprises have weak hedging willingness, and the progress of warehouse receipt registration lags behind the same period in previous years, driving the market to repair the basis.
(3) The main reason for the surge in cotton futures contracts this time is mainly due to a technical rebound, and funds have also contributed to the surge in cotton main contracts.
After the yield data came into effect, cotton prices were mainly affected by demand fluctuations, with an increase in downstream operations near the Spring Festival, providing short-term support for cotton prices. Considering that the positive demand has already been reflected and the increase in downstream orders is not sustainable, this trend is still a temporary rebound.
In terms of domestic supply and demand, the order quantity of textile enterprises has improved, and the operating load of yarn and fabric has increased month on month, but the increase has slowed down; Downstream demand has improved, but the duration is relatively short. As the Spring Festival holiday approaches, textile companies will have one to two weeks left to suspend work and vacation, which has limited impact on cotton prices. Looking at the industrial chain from top to bottom, there is a large amount of unsold lint in the upstream ginning factories, and commercial cotton inventory is rapidly increasing, currently reaching a historical high in the same period; Both midstream textile enterprises and textile mills have taken actions to replenish raw materials and remove finished products. The cotton yarn inventory of textile enterprises has decreased significantly, but most of it has become downstream inventory, resulting in a higher overall inventory level of cotton yarn. Anyway, Zheng Mian's recent surge has given the market confidence, and perhaps they can be more optimistic about the post holiday market.
