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[Market Review]
From June 27th to July 1st, Zheng Cotton's main contract fell 1.2%, reported 17315. The main cotton yarn contract rose 0.4% to 24120.
[Important information]
Domestic cotton spot prices have increased by about 200 with futures prices. The basis difference of Xinjiang machine-picked/hand-picked 21/31 grade inland warehouses is 600-1150, and the basis difference of double 28/single 29 is 400-850. The sales quotations of some lint in the spot market rose slightly, and textile mills were slightly cautious in purchasing raw materials.
In India, cotton prices may drop to 63,000 rupees/kandi due to the expected expansion of planting in the new year and weak demand. In addition, affected by factors such as market concerns caused by the U.S. economic recession and the strong outlook for the U.S. dollar, the international cotton price is expected to be around 80 cents/pound by the end of 2022.
Zheng cotton rebounded with the US cotton, and cotton yarn stopped falling and stabilized. Individual quotations increased by tens of yuan, but the overall change was not big. The market still has not improved significantly. Some cotton mills that stopped production in the early stage have plans to restart operations, so cotton purchases increased slightly.
[Trading Strategy] The short-term trend of the
cotton 09 contract is weak, and it will enter into shocks in the short term, so wait and see. In terms of
options, volatility remains low, and options can go long on volatility.
