Since June 5, Zheng cotton main CF2309 contract continued to consolidate in the 16500-17000 yuan/ton range, from the technical perspective, position changes, market sentiment, bulls did not intend to make a large profit to close the position, the 2023/24 cotton market bullish atmosphere is still strong.

Although some cotton processing enterprises and cotton traders with relatively high hedging rate are currently in an awkward situation (the spot increase obviously lags behind Zheng cotton, and the book floating loss of hedging disk is large); Although the raw materials with the purchase, low inventory of small and medium-sized cotton spinning enterprises spot spinning large area losses (high-count yarn high-distribution yarn still have profits, but the order is relatively limited), the enthusiasm of the terminal enquiry/procurement of American cotton, Brazil cotton, etc., has not changed the state of Zheng cotton high consolidation. From the plate point of view, CF2309 and CF2401 contract plate prices are inverted again, indicating that bulls are more inclined to hype near-month contracts.

Why is the lack of power of Zheng cotton short-term callback different from the feelings of cotton traders and cotton enterprises? The author's opinion is as follows:

First, there are objective concerns about tight domestic cotton supply in 2022/23. It is expected that domestic cotton consumption will rebound strongly from 2023 (many institutions and cotton-related enterprises will continue to increase China's cotton consumption data this year), and cotton imports have fallen sharply (as of April, This year's cotton imports fell 18.1% year on year) and polyester staple fiber, viscose staple fiber and other chemical fiber to cotton substitution weakened factors such as September, October cotton supply shortage of views increased.

The second is that the cotton planting area in Xinjiang in 2023/24 has decreased, the expected yield per unit area has decreased, the cotton listing period or delay, and the expectation that the seed cotton price will increase the cotton cost is strong, so that the bulls judge that the annual cotton price will run at a high level. From the current research of various institutions and cotton-related enterprises, the industry generally recognized that the cotton planting area in Xinjiang in 2023 was reduced by 8%-9% compared with the same period last year.

Third, in the second half of 2023, monetary easing will continue to increase, and commodity futures and stock markets will be supported. On June 13, according to the central bank, the interest rate of 7-day reverse repo was lowered by 10 basis points from 2% to 1.9%. This is also the first time that the central bank has lowered the reverse repo rate since August 2022. Industry analysis, this policy interest rate cut, released a clear signal of stable growth, will effectively boost consumption and investment confidence, and promote the real estate industry to achieve a soft landing as soon as possible. In the second half of the year, the central bank still has the possibility of lowering the reserve requirement ratio or targeted reduction, and introducing structural tools, which will help release long-term and low-cost funds, further reduce the cost of bank liabilities, and enhance the ability and enthusiasm of banks to expand credit.

Fourth, the number of Zheng cotton warehouse receipts + effective forecasts continues to decrease, and the pressure on the firm is reduced. According to statistics, as of June 14, Zheng mian registered warehouse receipt 14618 (of which 8625 in Xinjiang, 5993 in the mainland), effective forecast 735, the two total 15353, in addition to May 23, a slight rebound, since late April every day Yin fell more than.