Confirmed news, the cotton rotation of the State Reserve has been extended by one month
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A few days ago, the topic of the state reserve cotton round, which has attracted much attention in the industry, has heated up again.
According to the recent changes in domestic cotton supply and demand and market situation, in order to ensure the supply of cotton market and meet the needs of textile enterprises for processing cotton, the National Development and Reform Commission and the Ministry of Finance The ministry jointly issued an announcement on the extension of the rotation time of cotton reserves, stating that the deadline for the sale of national cotton reserves in 2015/2016 has been extended from August 31, 2016 to September 30, 2016.
In addition, the announcement also clearly mentioned that the total amount of cotton stored in the state this year will not be limited to 2 million tons, and the final volume will be based on the actual transaction volume. .
This news has a direct impact on cotton futures prices.
Industry insiders pointed out that under the expectation of selling off reserves or increasing volume, the average transaction price of state-owned cotton is expected to stop rising and stabilize, and the continued upward momentum will be restrained. During the same period, the spot price of domestic cotton futures also declined. Among them, the main contract of Zheng Cotton dropped by the limit, and market speculation gradually cooled down.
According to the general expectations of textile companies, if this rotation is not postponed, then, under the expectation of insufficient market supply, companies will be enthusiastic about stocking up, and cotton will be affected. Due to the impact of high prices, even if downstream companies have reduced production, driven by the purpose of ensuring normal production, they have to “bear the pain” of purchasing.
Now, when the storage sale time is postponed, affected by limited funds, downstream factories have gradually become “calm” in purchasing cotton, and bidding enthusiasm has also increased. weakened.
It is understood that the period from May to August every year is a period of “sluggish supply” of cotton. The growth of new cotton and the digestion of old cotton make the cotton in the market There is a mismatch between supply and demand. The demand of downstream cotton spinning enterprises mainly relies on the release of cotton from the state reserve.
Entering August, under the impact of the news that the reserve sales will be postponed for one month, the domestic cotton market will maintain a weak pattern in the short term, but the downside space is also limited. In the later period, it may Entering a period of shock.
Industry insiders pointed out that the postponement of the state reserve cotton rotation is equivalent to good news for cotton spinning companies as a policy to support the market. On the one hand, this move can provide policy support for downstream enterprises to maintain basic cotton use and play a role in maintaining market stability; on the other hand, from the perspective of national regulation, it is also conducive to combating the madness of cotton traders in the early stage. Speculation behavior further promotes the adjustment of the domestic cotton trading market to a stable and healthy atmosphere.
Although the extension of the state cotton reserve is good news for downstream companies, some cotton companies with large inventories will face pressure. It is understood that since the state reserve cotton was released in May this year, the market has been chasing the state reserve cotton, but the spot stocks of cotton companies have been left out, and the unsaleable rate has increased significantly, further exacerbating the inventory burden of enterprises.
：Reprinted from China Textile Network
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