
CCSE electronic prices rose slowly in late May and early June. Prices ended higher after trading on both sides by speculative and trade buying on Friday. June Raw Silk closed 193970 yuan and Sept. Raw Silk closed 199880 yuan. June Dried Cocoon closed 59170 yuan and Sept. Raw Silk closed 64480 yuan per ton. Most of the tradings these days was technical in nature mixed with some fundamental news in the market.
For Sept. Raw Silk, from technical analysis, a medium-term double bottom pattern is visible on the chart targeting 202580 yuan next week. Horizontal price line at 189860 yuan also gave good support this week And this will continue to be a crucial support level in the near term. This week also saw prices making higher highs and higher lows a sign a sign of genuine up trend in progress.
The gathering of fresh cocoons has finished and Purchase price fluctuated around 1000 yuan per 50kg in most regions of south Jiangsu and Zhejiang till now. There is a reduction in cocoon purchase price compared to last spring, however, still in the acceptable level for silkworm raisers. Cocoon quality seems some lower than last spring but remains a good level due to high temperature impact during the crop season.
Market sentiment is fairy complicated till now.
The following factors should be taken into account:
1)Currency revaluation
2)Export rebate policy
3)Slow silk export growth
4)Chinese domestic inflation pressure
5)Surplus silk reeling capacity
6)Changes of Trading method and trader psychology due to contract margin adjustment from 5% to 20%
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