A preview of the cotton reserve rollout: Traders’ willingness to bid for reserve cotton

At present, the time for the rotation of cotton reserves in 2016 is approaching, and cotton traders are more cautious. So, how enthusiastic are traders to participate in the auction of cotton reserves? As the time for the rotation of cotton reserves is approaching, some cotton textile mills are currently Preparations for bidding funds, account opening and other related matters have begun. Different from the cheers of some small and medium-sized cotton companies, cotton traders are more cautious. They are worried that the low bidding price is not conducive to the current inventory spot sales, leading to an expansion of losses and a reversal of supply and demand. They also have concerns that the bidding floor price is too high, and the price difference between domestic and foreign cotton Expansion, the export competitiveness of cotton textiles has declined, and small and medium-sized cotton textile mills are worried about accelerating the suspension of production and closure. So, how active are traders in participating in reserve cotton auctions? Some traders expressed their views.

The key to whether to participate in the auction depends on the quality of the cotton resources in the round. From 2010 to 2015, the state vigorously promoted the textile industry to accelerate technological transformation, industrial upgrading, and adjust product structure. More than 50% of my country’s cotton yarn market below C32S has been given to Southeast Asian countries such as India, Pakistan, and Vietnam. Most textile companies produce C32S and The proportion of cotton yarn with the following counts is less than 20% or even 10% of the total product volume. The demand for cotton by textile enterprises is mainly 28mm and above, horse value is B/A, and breaking strength is 28CN and above. If the reserve Cotton wheel resources cannot meet the needs of textile enterprises. No matter how low the bidding price is, traders and textile enterprises will not be very enthusiastic about participating in the auction. Traders are just a “reservoir”, and the actual needs of downstream customers are the key. Sufficient preparations must be made, but whether to enter the market for bidding depends on the demand of cotton spinning mills.

The phenomenon of cooperative bidding between traders and textile companies will increase. Since 2015, the credit support provided by various national commercial banks and financial institutions to the textile industry has dropped significantly. Not only has the import trade of cotton and cotton yarn been affected to a certain extent, but domestic raw material procurement of textile enterprises has also been stretched. In 2016, this cash flow was tight. , the situation of heavy destocking pressure is difficult to change, so some relatively well-funded traders and textile companies jointly bid for cotton reserves, and it can be said that they hit it off. The traders provide funds and are responsible for warehousing raw materials, and the textile companies “pay one batch for one batch” ( Including interest)”, textile enterprises only need to put forward requirements for raw material quality, and traders provide “one-stop” services.

Don’t save cotton, don’t accumulate risks, and don’t occupy too much funds. Some traders believe that the domestic cotton supply and demand in 2016 is just a structural contradiction. There is a shortage of high-grade, high-quality, spinnable cotton, and the “flooding” of low- and medium-quality lint cotton has caused a shortage of cotton textile companies and traders. The focus is on high-quality reserve cotton, so the limited cotton resources may trigger relatively fierce bidding. In the early stage of the auction, it may support the Xinjiang cotton spot. However, as textile companies gradually complete the restocking, more than 10 million tons of reserve cotton are still needed. Will the auction floor price be lowered due to vigorous destocking? If it is lowered, it will definitely have an impact on lint sales. Therefore, regardless of the quality of the cotton reserves, it is most important not to store cotton, not accumulate risks, and not to occupy too much capital. An early look at the 2016 reserve cotton rotation: Traders’ willingness to bid for reserve cotton

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