Market Analysis: According To The Late Trend Of Cotton Futures Prices, Cotton Prices Will Rebound Periodically

The main cotton producing countries in the world basically maintain a high yield or high yield, which is also the main reason for the global surplus of supply and demand in the new year. The global cotton output in 2024/25 will increase significantly month on month. Among them, American cotton will increase again, Brazil will continue to have a high yield, Australia will have a high yield, and China will also have a high probability of increasing production. At present, only India may have a small yield reduction, The cotton planting area in India is still low on a year-on-year basis.

As of July, the commercial inventory of cotton was 2.78 million tons,+450000 tons on a year-on-year basis; The commercial inventory of cotton in Xinjiang was 1.55 million tons,+160000 tons on a year-on-year basis; Mainland commercial inventory was 780000 tons,+60000 tons year-on-year; The commercial inventory in the bonded area is 440000 tons,+230000 tons on a year-on-year basis; The current commercial inventory is higher than that of the same period last year, but the amount of sliding allowance tax quota this year is less than that of last year, which is only 200000 tons this year and 750000 tons last year. In addition, there is no dumping of stocks this year. Pay attention to the inventory digestion. From September to October, the inventory digestion speed may be accelerated.

This year, the commercial inventory of cotton was relatively high on a year-on-year basis, and the accumulated imports in 23/24 also increased significantly. The demand performance was average, leading to adequate cotton supply; By the end of July, the commercial inventory of domestic cotton was 2.7782 million tons, an increase of 450700 tons year on year; By the end of July, the cumulative imports of 23/24 were 3.09 million tons, an increase of 147% year on year and 1.84 million tons.

It is worth noting that from January to July 2024, the total retail sales of domestic textile and clothing in China will be 139.17 billion yuan, an increase of 0.23% year on year. At the same time, the total export volume of textile and clothing was USD 170176 million, a year-on-year decrease of 1.24%. Chen Jianing said that, on the whole, the terminal consumption of cotton this year was stable compared with last year. For the current cotton futures price, investors can focus on the recovery of orders in the domestic downstream peak season in the short term and the weather changes in the American cotton producing areas, and focus on the production landing of countries in the northern hemisphere in the new year and the acquisition of new flowers in Xinjiang in the medium term.

In view of the late trend of cotton futures prices, in the short term, as the macro atmosphere becomes more and the downstream demand improves, cotton prices will rebound periodically. However, in the fourth quarter, with the gradual listing of new cotton, due to the expected increase in production of new crops and the shift of supply and demand to easing, there may be a risk of a double dip in cotton prices. From the perspective of trading strategy, the fourth quarter should focus on the opportunities of rebound short selling.

Although the price of cotton futures is basically stable in the short term, due to the large increase in global supply in 2024/25, the demand performance is general, so the pressure of supply is still faced in the medium and long term, limiting the height of prices. When cotton futures prices stabilize, they may participate in the rebound in the short term as appropriate. In the medium and long term, due to the pressure of supply, it is still worth paying attention to the sale of deep unreal call options.