The Demand Is Bad; &Nbsp; The Cotton Market Is Dim.

In the first 1 months after the summit in February, Zheng Mian main force 1209 the largest contract decline has exceeded 1000 yuan / ton. By analyzing the fundamentals, I believe that Zheng cotton will continue to adjust in the short term or wait for the demand to pick up.

　　 The arbitrage space is narrowed and the market pressure is big.

At the end of January, the huge contract interest rate of the May contract attracted many over-the-counter funds. This can be verified from the substantial increase in zhengcotton futures warehouse receipt. After February, the total number of registered warehouse receipts and effective forecast warehouse receipts increased from less than 700 to 3000. The 1 warehouse list corresponds to 40 tons of cotton, which means that there are nearly 120 thousand tons of potential deliveries worth more than 2 billion 500 million yuan. At present, the September contract down to 21500 yuan / ton, in the ideal state, the current arbitrage annual yield of about 10%, is no longer enough to further attract arbitrage capital admission. In the face of greater market pressure, if the market wants to rise, it will need to rise in cash to attract spot traders to undertake futures warehouse receipts, or wait for futures to fall enough enough to attract new capital.

　 India export policy disrupts rhythm

In March 5th, India suddenly Announcing restrictions on cotton exports, but only 7 days later, in March 12th, it also announced the lifting of the ban. In 2011, India surpassed the United States and became the largest supplier of cotton imports to China. According to the US Department of agriculture's supply and demand report this month, after the Chinese government seized more than 2 million 800 thousand tons of cotton, the US Department of agriculture also realized that China's imports will surge this year, thus increasing the import volume of China, from 17 million packages to 18 million 500 thousand packages, but at the same time, increasing the volume of India's exports from 6 million 250 thousand packages to 7 million 750 thousand packs, just to meet the needs of China. Judging from the adjustment of the US Department of agriculture, at least from their perspective, China's imports will mainly depend on India's exports. Although India has cancelled the previous ban, the General Administration of foreign trade has suspended the issuance of new export licenses, and the date of release is otherwise specified. The uncertainty of India's cotton export policy has led to a sharp increase in cotton market variables.

　 Insufficient demand on spot is the root cause.

At present, the root cause of the weak cotton market is not in supply, but in demand. Customs head office According to the latest data, in February 2012, China exported about 9 billion 712 million US dollars in textile and clothing, a decrease of 7.01% compared with the same period last year, and a decrease of 54.87% in the ring ratio. From 1 to February 2012, textile and apparel exports totaled 31 billion 230 million US dollars, down 2.59% from the same period last year. Poor demand, coupled with the suppression of the off-season in February, led to a decline in downstream cotton consumption, resulting in a decline in cotton yarn profits. The sluggish sales made the enterprises do not have extra funds to increase cotton stocks. According to the latest survey report, industrial inventories increased by only 1 million tons in February. The demand for replenishment of enterprises has not been released for a long time, so it is difficult to drive up prices.

To sum up, although the current arbitrage space has been narrowed, but the pressure and weak demand may make Zheng cotton continue to adjust, until the demand gradually warmer, will come out of a relatively good rebound. However, as the 20400 yuan / ton is the price of the purchase and storage in 2012, there is a limited space for the decline of the 1209 contracts. If it falls to 21000 yuan / ton, it will be a good opportunity to build more long-term and more contracts.