Main points of production technology of benchmark cotton yarn for delivery
——Wang Keli, Investment Department of Weishi Textile

 

The report is divided into three parts. 

Firstly, the changes in cotton yarn futures delivery rules. The new rules widen the quality scale of benchmark cotton yarn for delivery and get more close to the actual market situation. The premiums and discounts of substitutes were also described clearly, providing a certain operation room. 

Secondly, spinning process and quality requirements. The spinning process includes chute-feed card, drawing, roving, spinning, autoconing and packing. The indicators of cotton used in the production like fiber length, strength, maturity, impurity, moisture regain and foreign fiber affect cotton yarn differently. During cotton assorting, the cotton with good uniformity and good consistency, appropriate indicators and less foreign fibers. In production control, quality management mechanism is implemented, raw materials are strictly selected and the technique parameters are set rationally to produce qualified products. 

Thirdly, cost control. Cotton yarn cost=Cotton cost price*consumption + processing fee (freight). The cost can be controlled by expanding procurement channel (cotton farmer, traders and futures companies) and improving procurement method (fixed-price, basis point pricing and on-call). It can also be controlled in production process such as choosing raw cotton meeting the quality requirement of cotton yarn and avoiding the raw cotton cost wastage caused by superior quality of raw cotton, and enhancing the process control, reducing waste, decreasing unnecessary loss and improving the production rate of various processes. Flexibly using futures can also control the cost. For example, using hedging, arbitrage, intertemporal arbitrage and cotton and cotton yarn cross-species arbitrage, etc., to lower price risk, control cost and lock-in of profit.