Analysis of futures contracts for Shanghai silver, caustic soda, cotton, palm oil, coking coal, natural rubber, soybean meal, soda ash, alumina, and sugar on October 27.

【Answer 1】 Last week’s long positions established near the support level of 9400 were exited on Friday evening upon reaching the target zone of 9700–9750. The contract subsequently retraced during the day and currently appears to be in a phase of range-bound bottom-finding. Short-term trading remains range-oriented: await further pullbacks to re-enter longs in the 9450–9500 zone, targeting 9700. Specific adjustments for live-trading clients will be made dynamically with market movements. Coking Coal (Contract 2701) Overall, in the near term, both coke and coking coal are caught in a tug-of-war between rising supply expectations and the reality of low inventories coupled with high basis. Coke benefits from low inventory at cokemakers and steady steel mill demand, providing some floor support; however, with the approaching off-season for steel consumption and downward pressure on coking coal’s cost base, significant resistance looms overhead. Dual-coal prices are thus expected to trend sideways with a slight bearish bias. Key watchpoints going forward include ironwater output trends, coal mine resumption pace, and the strength of terminal demand during the upcoming peak season. Follow/Contact: YL98500123 Coking coal has recently been consolidating near the 1400 threshold. For now, we await a confirmed breakout and sustained hold above the 1430–1440 resistance zone before considering short-term reversal patterns and initiating new long positions. Adjustments for live-trading clients will be made dynamically with market movements. Natural Rubber (Contract 2701) Recently, upstream factories’ willingness to pay premiums for raw materials has declined, while supply has gradually increased—leading to some softening in raw material prices, though absolute levels remain elevated. Provided weather disruptions do not intensify further, domestic port arrivals are expected to continue rising. Meanwhile, downstream tire manufacturers maintain low raw material inventories and continue depleting finished-goods stocks—indicating limited acceptance of current raw material pricing and lackluster order demand. Going forward, attention should focus on whether tire makers can successfully pass through price hikes. Short-term price action aligns with our earlier suggestion of range-bound trading. Currently, short positions initiated at higher levels have already secured profits on a short-term basis. For new positions, the range-trading framework remains unchanged: consider shorting near resistance around 20,000, and look to go long on dips toward support at 19,000–19,100. Adjustments for live-trading clients will be made dynamically with market movements. Soybean Meal (Contract 2701) U.S. soybean harvest pressure is gradually materializing, and bearish factors are being increasingly priced in—slowing the pace of decline. Domestically, oil mill crush margins continue rising, and soybean meal inventories remain elevated; spot demand is largely driven by immediate needs. Thus, domestic soybean meal futures are expected to trade sideways near lows in the near term. Recalling our prior outlook: since upward momentum failed to emerge, and the previously identified support near 3230 was tested intraday, a portion of long positions was closed for profit. Should further downside unfold, adding longs near the round-number level of 3200 is advisable. Near-term resistance is set at 3280–3300 for short-term profit-taking. Adjustments for live-trading clients will be made dynamically with market movements. Alumina (Contract 2701) Current prices have approached the cash-cost level for some production capacity—but no curtailment has yet been triggered. We maintain that, absent substantive production cuts or the opening of export windows, alumina lacks catalysts for a structural reversal—and will likely continue probing lower in a weak trend. Key risk factors include bauxite supply disruptions and concentrated alumina production cuts. The prevailing market structure is one of weakness punctuated by attempts to find a floor. Stability—not aggressive bottom-fishing—is what the market most needs right now. At this stage, there is no urgency to add long positions at lows. Wait instead for confirmation of a reversal signal before entering. Near-term resistance lies at 2590 and 2620; a confirmed breakout above either level would warrant phased long entries.

【Answer 2】 As of September 2025, the Xinjiang Development and Reform Commission has intensified its crackdown on and prohibition of ‘white-note’ financing practices—making enforcement significantly stricter than in previous years. Overall cotton output this year may reach 7.3 million tons—or even 7.5 million tons. Meanwhile, the number of operational ginning mills across Xinjiang may fall short of 1,000. Once the number of ginning mills drops below 1,000 and total output exceeds 7.15 million tons, seed cotton will no longer be in short supply—instead becoming broadly distributed, with nearly every mill receiving an allocation. Historically, processing capacity far exceeded actual output—a severe supply-demand imbalance. High-risk participants—including contract processors, large-scale cotton farmers engaging in toll processing, and other speculative groups—poured into the sector. State-owned enterprises (SOEs) also continuously injected capital into ginning operations. In Northern Xinjiang, however, there is simply insufficient financial capacity to compete for seed cotton. Meanwhile, financially robust SOEs have largely withdrawn from the region—and the sole remaining leveraged acquisition method—‘white-note’ financing—has been strictly banned. Fundamentally, therefore, the underlying conditions for competitive bidding no longer exist. Ginning fees in Northern Xinjiang have fallen to historic lows. Moreover, as most gins are owner-operated rather than outsourced, their sunk costs are relatively low—enabling them to exit the market easily. Even some spot-futures traders, eager to secure physical delivery, are now paying deposits directly to ginning mills. For long-position holders, price declines carry enormous costs: maintaining valuations on certain holdings requires substantial margin calls—if not supported by commensurate hedging capital, the pressure mounts rapidly. Hence, efforts to prop up prices persist, often manifesting as relentless, unthinking limit orders at specific price levels—likely reflecting accumulated hedge positions rather than pure speculation. To sustain this year’s record-high seed cotton procurement volume, futures open interest must increase by over one million contracts. Otherwise, falling seed cotton purchase prices will drag down futures prices—further eroding market risk appetite and forcing gins to cut purchase offers. Futures longs must absorb all hedging positions on the board. Failure to do so risks triggering a cascading negative feedback loop across the entire seed cotton procurement chain. If speculative funds attempt to test the board this year, such feedback could accelerate dramatically—until prices fall to levels where ginning mills willingly assume risk again, and textile mills begin increasing inventory—effectively sharing the burden with futures longs. Currently, ginning mills—especially those in Northern Xinjiang—remain extremely risk-averse and highly cautious. Though some have commenced operations, many avoid opening even when futures offer hedging opportunities. Cotton farmers repeatedly inquire about start dates, yet gins show little enthusiasm. Fundamentally, ginning mills are processing enterprises—but seed cotton procurement transforms them into entities bearing the active risk of cotton farmers’ sales decisions. This dynamic drastically lowers their risk appetite: they prefer to avoid assuming risk outright, choosing instead to wait for favorable futures pricing to hedge and transfer risk.

India expected to extend duty-free cotton imports through December, sources say

Oct 26, 2026

India is expected to extend duty-free cotton imports through December to reduce costs for textile mills amid tight domestic supply. The move aims to curb rising prices caused by lower crop prospects and strong demand.

reuters

India expected to extend duty-free cotton imports through December, sources say

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