Long Term Cotton Needs Patience.

In the past two weeks (6.30-7.11), the Zheng cotton index has fallen sharply again, dropping from the high 14485 to 13981, dropping nearly 500 points, and the Ccindex index of the relatively stable spot market also dropped 80 points.

At present, cotton is still in the market of short control. This article will make an analysis of the trend of cotton in the near future.

　　一、全球棉花形势

ICAC (International Cotton Association) predicted in July 2nd that the global cotton production in July 2nd will be reduced by 25 million 500 thousand tons due to the same decline in the two main products in China and the United States.

Consumption will increase to 26 million 600 thousand tons due to the increase in China and India, and the end of the world inventory will be reduced to 11 million tons, or more than 1 million tons. The year will be second consecutive years higher than consumption.

ICAC also expects global cotton prices to be 82 cents per pound in 08/09, up from 73 cents in 07/08.

The US Department of agriculture believes that global cotton stocks will be at the most tense time in 5 years.

　　从长期来看，全球棉花供给面临缺口，基本面利好。

　　二、国内棉花形势

1, the textile industry is in a predicament to curb cotton demand.

China is the largest cotton consuming country in the world, and also a large exporter of traditional textiles. In recent years, export volume accounts for a large proportion in the overall export trade.

The rise and fall of the textile industry will directly affect the demand for cotton.

This year, China's textile and clothing exports have slowed down. At the same time, under the current inflation premise, the export tax rebate has declined, the RMB appreciation has accelerated and the labor cost has been raised to a great blow to the textile industry. At present, the domestic textile industry is facing difficulties and has a relatively large impact on the domestic cotton trend.

2, cotton enterprises face repayment deadline cotton sales pressure

In order to prevent the risk of cotton purchase loans, the head office of Agricultural Development Bank recently issued the notice on the qualification confirmation of cotton purchase loan in 2008, and decided to continue to carry out the qualification confirmation of cotton purchase loan in 2008, and plans to complete it by August 20th.

The qualification for the new year is certify on the basis of the affirmation of loan credit last year, so paying close attention to repayment is the urgent task facing cotton enterprises.

3, the State supports the increase in short-term supply of New Territories cotton.

To help solve the problem of high cost of pferring cotton from the mainland to Xinjiang, and to protect the enthusiasm of Xinjiang to develop the cotton industry, the Ministry of Finance recently promulgated the Interim Measures for the management of the cost of removing the cotton from the warehouse, and decided that the central government's subsidy should be 400 yuan per ton, regardless of its grade and length.

The Interim Measures stipulate that financial subsidies can be enjoyed by cotton purchasing processing enterprises, cotton business enterprises and textile enterprises with the ownership of cotton.

The subsidy for the cost of moving out of the cotton warehouse was calculated from September 1st to August 31st of next year, and the subsidy period was tentatively scheduled for 2007 to 2010.

According to the decision of the Ministry of railways, from July 10th to the end of August, the Urumqi Railway Administration will ensure that 270 daily cotton wagons will be sent from Xinjiang to the mainland, so that 11 thousand tons of cotton will enter the mainland market every day.

　　棉企售棉还款，新疆棉大举运入，两因素同时加剧了内地棉花市场在短期内的供应，另一方面纺织企业需求依然没有起色，致使短期内地棉花市场供大于求，这也是近两周棉花快速下跌的主要因素，目前仍然没有得到有效缓解，因此短期上涨压力很大，仍被空头主导。

　　三、关注焦点

The collective dilemma of the textile industry has attracted the attention of the relevant departments of the state. The news about the callback rate of textile export rebates has been circulated in the market. It is said that besides the textile export tax rebate rate raised by 2% and the export rebate rate of clothing export increased by 4%, the export of viscose fiber from the main raw material of textile will be greatly adjusted. The increase may reach 10 points, from the current 5% to 15%.

The callback policy is likely to be low in July.

In addition, the main leaders of the government recently conducted a survey of five provinces in the East, indicating that the state has reconsidered the current economic situation. There is news that tight monetary policy is likely to be eased.

　　出口退税上调和货币政策放松都会对纺织企业资金产生正向影响，从而增加其购买棉花力度，加大棉花需求。

Conclusion: although cotton is good in the long run, cotton price is still in the bottom process under the influence of many unfavorable factors.

The price difference between Zheng Mian 809 and the 901 contract is nearly 1000 points, and there is arbitrage opportunity, which can buy 809 to sell 901.