The Sword Of Damour And Chris Hanging On The Head Of The Global Cotton Market

As a whole, the reserve policy is the whole of the world.

The homogenization of trade and procurement decisions eventually accelerated the bottom up and helped to amplify the market's rebound rate and speed.

As early as 2013/14, the closing of storage was completed.

China's reserves

There is a lot of debate about how to solve the problem.

Because cotton has never been a country in the history of its annual inventory consumption ratio of about 200%, and at the same time as high as half of the world's annual output of 12 million tons of reserves.

Therefore, the 12 million tons of inventory sales and inventory problems should be regarded as the sword of Damour and Chris hanging on the head of the global cotton and textile market.

In history, every country in China has a large number of inventory solutions. It often takes China's short term export of cotton to the international market, the deep pressure on global cotton prices and ultimately the suppression of supply.

What makes people laugh and laugh is that every time when China exports a lot of surplus goods, it is the bottom of the global cotton market.

Therefore, from the beginning to the end, the relevant departments should have prepared a plan to avoid this simple and crude inventory history lesson.

Looking back on this process, China's preparations for the current round of stockpiles and the release to the domestic and international markets are all a responsible signal for easing the pressure of internal and external spreads. This is also a point that the relevant departments are consistent in terms of expected management and final policy implementation.

Every cause has fruit.

Under the condition that China's reserve policy is clear but slow and restrained, foreign cotton traders and cotton mills must take corresponding measures for their own interests.

From the aspect of the cotton mill, the international cotton mill and China's cotton mill are looking forward to the implementation of the bad policy. Therefore, from the last summer's hairdressing period to the 16 rumors of widespread speculation in March, the following two coping styles have been adopted.

1. follow the purchase with purchase so as to control the scale of raw material stock in the plant; purchase on CAll for the supply that must be locked, but try to delay pricing and avoid the risk of falling price.

2., increase sales force and maintain cash flow and normal operation of enterprises with small profits but quick turnover.

The move is also intended to control the rise in the finished product inventory level.

In addition to the above low raw materials inventory, the international cotton mill's gauze inventory is also in the same historical low.

Correspondingly, the Futures (gray fabric, fabric, printing and dyeing and clothing Home Textiles) enterprises in Zhengzhou and New York futures are near high and low reverse base, while China's reserves haven't been released.

So generally speaking, the purchasing decision of the global cotton mill has considered the Chinese factor to a greater extent, not the supply and demand situation and balance sheet of each production and marketing place during the year.

In terms of International Cotton Traders and cotton producers in origin, they are more awe of China's policy power. Especially, some of them have experienced the market pain caused by the two large quantities of export reserves in China in the past. They also consider the supply and demand problems in the balance sheet, and are generally empty before the huge reserves are digested. They have strictly implemented a robust hedging strategy.

For international cotton traders, it is extremely difficult for the cotton producing countries in the northern hemisphere to suffer a relatively serious high temperature and drought disaster in the year of 15/16, resulting in a decline in their production. Therefore, the farmers and trading companies in the northern hemisphere naturally sell at a premium. At the same time, the sale of the international cotton merchants is difficult to improve because of the restriction of the purchase price of the international cotton mills and end buyers.

As a result, the market shows a significant buyer's market behavior pattern, which reflects that the international cotton trader's purchasing base is high but the sales base is on sale.

And this market feedback has deepened the cotton trader's bad judgement for the market.

Therefore, as we trace back to the end of the current year, it is clear that the South Asian subcontinent, led by India and Pakistan, has been exporting domestic cotton in the early stage of the previous year when the balance sheet is tight.

However, in the early stage of market weakness, the participants who struggled day by day, whether they were cotton producers from origin, international cotton traders or local large and small cotton mills, were not aware of their dangerous situation.

Of course, in a sense, this is a complete afterthought of God.

Generally speaking, before the formal introduction of China's reserve policy, the global cotton mills and supply chains consumed a lot of goods in a weak price and the rhythm of buying and buying. At the same time, in the entire industrial chain of cotton yarn ~ cloth, there was a large amount of inventory behavior regardless of country.

The development of the following market is astonishing, but in retrospect it is only the result of the hidden danger.

With the delay in domestic storage, the vicious chain reaction in China's population is becoming more powerful than ever before. As a result, the participants in the market have been rushing to start replenishment and on call purchase at the early stage of pricing, which has injected a steady stream of support and procurement to the market.

What is frightening is that at this time, whether from the balance sheet or the actual source of goods from various countries, the remaining stocks in the year, whether in cotton or cotton yarn, suddenly become numbered.

Basically, the pmission of the market is basically based on the replenishment of China's cotton mill - India cotton mill replenishment - Vietnam Indonesian cotton mill replenishment - India cotton mill Pakistan cotton mill continues to replenishment - the Vietnamese cotton mill and Bangladesh mills are killing the rough rhythm again.

It should be pointed out that in the process, the India market actually conveyed the price signals to the world through the price signals over the past 2 months to the world, but the vast majority of cotton merchants and mills have ignored this phenomenon.

Since the end of April, the India cotton mill has made strong purchases of West African cotton, resulting in strong support for the West African cotton and Brazil cotton's old flowers at 800-1000 points, and the corresponding domestic prices in India have basically reached the level of plain cotton water in West Africa.

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The market thought that this is the traditional old drama of India's low and high level in the past few years. It has not been given enough attention, especially in the absence of inventory control in India CCI this year.

However, about 5 months later, the procurement in India market has exhausted the supply of the above two localities. About 10-20 days later, India's domestic prices climbed rapidly to 1500 point basis level and reached the level of cotton and cotton plain water, thus triggering the large-scale sale of Australia cotton. By the end of June, the market had clearly found that the Indian and Vietnamese mills continued to catch up with procurement at the 62-64 cents futures level and did not wait for the market to callback.

As a result, with the July 12th USDA monthly supply and demand report finally confirmed that the tight global supply and demand will be extended to the new year and even the first quarter of next year, the outbreak of enthusiasm will eventually lead to a comprehensive breakthrough in futures.

To sum up, although the international market factors are numerous and complicated, China's reserve policy and potential volume have been put into the eyes of "traders in the room" and "elephants in the room".

Finally, when China's policy began to be implemented and pformed from unspeakable bad profits to unimaginable profits, the continuous replenishment of the region by stages and batches of regional scale enlarged the duration, scale and extent of the whole market.