Emerging from the New Deal and escorting the textile industry
On June 2nd, China Reserve Cotton Management Co., Ltd. and the National Cotton Exchange Market jointly issued the “Announcement on the Matters Relevant to the Reserve of Reserve Cotton in 2017/2018”. The announcement pointed out that from June 4th, 2018 to the end of this year's turn, the cotton reserve trade was limited to textile cotton companies participating in the bidding, and non-cotton cotton enterprises were stopped from participating in the bidding. The reserve cotton purchased by textile cotton enterprises was only Limited to the company's own use.
According to the data from the 11th weekly report of the Reserve Cotton Round, as of May 25, 2018, there were 541 enterprises that had been traded, of which 380 were textile companies with 460,000 tons traded, 161 traders, and 510,000 tons traded. Up to now, more than half of the reserve cotton traded has been obtained by the traders, which has intensified the increase in cotton prices. Market analysis believes that by the end of the current year's rotation, the reduction in participants participating in the reserve cotton auction will lead to a decrease in the bidding intensity, the price increase rate will fall, the reserve cotton price will have a more competitive advantage in the market, and at the same time, it will effectively guide the spot price to return to a reasonable level.
On the day of the announcement of the policy, textile companies liked it. Recently, the linkage between domestic and foreign cotton prices has risen sharply, which has brought pressure on textile companies to purchase cotton raw materials. Since mid-April, the transaction rate of reserve cotton has steadily increased, and it has remained at 100% in the near future. As cotton prices continue to rise, relevant departments adjust the main body of reserve cotton transactions. In order to stabilize market prices and play a role in the policy of controlling reserve cotton, not only can domestic cotton prices be regulated and adjusted in time, but also textile companies escort cotton, and the domestic textile industry The competitiveness is expected to increase.
The market generally expects that from the 4th of June, the spot price of cotton may have a downward trend, which will be good for entities. For the market concerned about the cotton price trend later this year, still need to return to the cotton supply and demand situation to judge.