Short selling when there is no stock in the futures market is similar to short selling when there is no stock in the stock market. Once discovered, there is only one outcome.

That is, facing huge losses due to being forced to short sell by huge volume, the bulls will not stop reaping the benefits until the bears have emptied out their last penny.

Yutai, Jiangsu and Zhejiang, and Taishan Capital chose mid-July, a special time point, to turn from long to short. To put it bluntly, if the cotton price continues to rise, they will not make any money.

The player with the largest buying positions in the market is Qingyun Group. Its long positions in the three delivery months of May, July and September once accounted for more than one-third of the market, and the cost of building positions was extremely low.

As the price of cotton rose from 1.3-1.5 yuan per ton in April to more than 1.9 yuan in July, Qingyun Group's invested capital leveraged ten times and earned a net profit of more than 500%.

They need to manipulate market transaction prices, buy off related people, create public opinion, directly invest funds in the spot market to purchase inventory, and even repeatedly place orders to continuously suppress the large funds that are making the market.

After working hard for a long time, I was shocked to find that the majority of the profits had been withheld by someone!

Upon further checking, I found that many of the orders have not been traded since they were purchased, they are just free riding!
Who can tolerate working so hard to set up a stage and perform, only to have the leeks, which have long been regarded as food, harvested by others in advance?

But no matter how they continue to control the market, they cannot stop the huge capital flow of Qingyun Group from going long without hesitation, especially after June, Qingyun's overseas investment returns.

Through foreign guarantees and domestic loans, funds continue to flow into the country, and a considerable portion of them flow into the futures market, preparing to pull the price to the desired level before the cotton is harvested and stored at the end of September.

It could be 2 per ton, or the historically high price of 5, or even higher. It all depends on the market environment at the time, as long as there are people who continue to take over.

Theoretically, there is no problem in pulling it up to 100,000, because most of the spot goods in the market are in Qingyun’s hands. If you want to close your position, you can, just bring the goods!

Then?

Then, we should use huge short orders to wipe out all the capital that intends to stir up trouble in the cotton market.

By then, the Qingyun Group, which will hold millions of tons of cotton stocks, will surely give all comprador capital and hot money involved in speculation an unforgettable lesson.

Qingyun is not worried about the fluctuation of cotton prices at all, because the global cotton planting area has declined, the inventory cotton reserves are insufficient, and the strong demand due to economic recovery are the main reasons for the price increase.

With its huge capital, connections and market advantages, Yutai Capital manipulates cotton prices, thereby reshaping the textile industry's division of labor and promoting globalization with convenient control as the core driving force.

As long as Qingyun Group holds on to this core, it will be able to make profits without losses.

In the Chicago agricultural products trading market, Qingyun is just an inconspicuous small player with a capital of no more than a few hundred million U.S. dollars. It usually focuses on trend-following investments and earns a meager profit.

It's not a lot, only a few billion US dollars were obtained in half a year, but this has aroused the vigilance of the four major grain traders, and they are privately investigating who stole the money from their pockets.

After several months of investigation, it was found that Qingyun deliberately exposed all the positions held by British and American financial institutions, which led to this targeted short selling.

As for privately, Lin Wenhui, Zhou Shouyuan, and Wei Kejian directed Southeast Asia and other overseas branches through secret channels and more than 400 securities companies in different countries.

The bulk of the money is made up of secretly held bullish options. These fragmented orders, which are often bought with a leverage of 100 times, have a total position size of over 100 million US dollars in principal alone.

Indirectly holds cotton positions of millions of tons.

It's not that there can't be more, but the problem is that financial institutions do not have more sell contracts to match. In Southeast Asia, Wei Kejian took over nearly one-third of the short-selling hedge orders from local textile companies.

In South America, Asia, and Australia, cotton hedging orders from countless agricultural planting companies were also bought in large quantities by Qingyun Group.

Price increase?

No problem, Qingyun Group made huge profits in the futures market.

Price drop?

That would be even more perfect. Behind Qingyun is the entire Dongda textile industry, which has been squeezed out of profitability by the high cotton prices. Now, every ton of cotton textile products produced is incurring a loss.

In order to avoid bankruptcy and liquidation and losing all their money, these small and medium-sized enterprises have no choice but to continue operating.

These companies can only survive if the price can be lowered smoothly. Their experience is the same as that of global gold jewelry companies. Only when the price of raw materials is low can the companies survive and make profits.

Once the prices of cotton and gold soar, costs will also soar. The most important thing is that the consumer market begins to shrink sharply, and most ordinary consumers will choose to hold their money and wait and see, waiting for product prices to fall.

Qingyun Group is also waiting for the right opportunity to bring down the price. By then, relying on its huge cotton inventory, it will acquire and merge countless textile factories and thus control the lifeline of the entire industry.

The higher-ups are happy to see this happen. Even without Qingyun, the National Development and Reform Commission and the State Administration of Reserves are formulating new policies and are preparing to establish a strategic policy for cotton planting and minimum purchase in the coming year.

With the employment of tens of millions of people involved, who dares to joke about the future of the industry...

In this environment, the four major grain traders, together with the world's top capital such as Glencore and Goldman Sachs, began to try to replicate their usual tactics in the copper futures market.

To put it bluntly, it is a combination of deception and the big stick.

They did the same six years ago, when international copper prices continued to rise, reaching a historical high of US$3000 per ton.

In theory, Western capital should be happy because the higher the copper price, the more money they can make from exporting the copper mines they control.

At that time, domestic copper mining and production accounted for only 10% of the world's total, but it held more than 60% of the world's copper product production share, and its annual import volume accounted for more than half of the global trading volume.

It is very similar to the situation of today's textile industry, as if it is a reincarnation of fate. At that time, the foreign exchange venture investment department of the State Reserve held a huge number of long orders in the futures market.

Today, Qingyun Group and the venture capital department of the Reserve Bureau jointly hold long positions in strategic materials such as grain and cotton.

As raw material prices skyrocketed, these long orders continued to contribute huge profits to the domestic market, making foreign investors jealous.

So six years ago, Glencore, Goldman Sachs and other top investment institutions joined forces and spent a month operating in the market, mobilizing a large number of domestic and foreign connections.

The one-sided situation that copper prices have reached their peak is being forcibly promoted, and upstream and downstream companies of copper products are forced to reduce demand, and copper prices are about to fall sharply is imminent.

I don’t know whether they were really fooled or the market really changed direction, but the risk hedging investment department of the national reserve believed it at the time and converted its long positions into short positions to avoid losses.

As a result, everyone saw that just after the long and short seats were exchanged, the situation suddenly changed. After a brief correction, the copper price once dropped from US$3000 per ton when the national reserve was shorting.

Rushing above $4400.

The tragic outcome of the short squeeze is still vivid in our minds. It is really bizarre that China, the world's largest importer of copper ore, went against the norm and exported 20 tons of copper ore despite the pressure.

The losses in the spot market are even greater, with the most conservative estimate being over 10 billion yuan...

To this day, international investment banks have teamed up with the four major grain traders to try to replicate this scene, using the same old methods.

First, in early July, several major British and American distributors and clothing industry giants announced that they would cut the size of their orders this year due to the continued rise in raw material and labor prices, especially cotton prices.

Immediately afterwards, textile industry associations of many countries collectively issued an industry warning, stating that due to the impact of cotton planting, output and prices, countries will cooperate with Europe and the United States to reduce textile import quotas.

As if fearing that people would not understand, the investment bank came out to release a professional industry report. The core point was that cotton prices were too high, the textile industry was not profitable, and production must be cut and production capacity shut down.

There are a lot of other things, such as the continued impact of the European debt crisis, Europeans don’t have the money to change clothes every day, and demand is declining.

In addition, the U.S. economic growth is weak, the operating rate of petrochemical enterprises is insufficient, and the supply of raw materials to the textile industry has declined.

The four major grain traders also jumped out at the right time to say that since the new cotton varieties were sown, the cotton yield would increase by more than 20% compared with previous years. Even if the sown area was slightly reduced, the overall output would increase...

Affected by this, the prices of July and September cotton in the Chicago Agricultural Products Exchange both fell to varying degrees and were continuously hit by large short sales.

In the remaining days of mid-to-late July, cotton prices continued to fall, causing heavy losses to many retail investors, hot money and small and medium-sized institutions that were unable to react in time.

Qingyun also closed his position to make a profit, and followed suit by selling short. He had to do the whole show, and those accounts that might be exposed were used as preparations for the short selling in September.

You can't catch a wolf without sacrificing a lamb. I chose to open an account with British and American brokerage firms, and the balance of the account is only a few hundred million US dollars. It doesn't matter if I lose it all.

As long as we can make the opponent believe that Qingyun is really shorting!
……

"Those accounts that are marked may be exposed. Don't worry about profits or losses. If you are currently making money, you are not allowed to close your positions. If you lose money in the future, you are not allowed to liquidate your positions. Pay me all the margin you need."

Li Zehua was also furious. "What virtue and ability did Qingyun Group have to allow so many top investment banks and big companies to target them? Isn't it just a loss of money to pay tuition? Give it to me! I'll give you as much as you want."

Lin Wenhui looked at his boss with a determined look on his face and couldn't help but give him a thumbs up, "Boss, it's a shame if you don't act with your acting skills." Others might not know, so how could he not know?

On the surface, the total loss of futures transactions with public positions is only a few billion US dollars, but once the price goes up, the net profit from the options alone can reach tens of billions of dollars.

"How much money can you make from filming?"

Li Zehua looked at him with disdain, "How can those people make more money just by talking?"

Hearing this, Lin Wenhui sighed, "I really don't understand why the group's overseas cotton long positions have attracted so much attention.

On the surface, everyone praised the group's business, but when it came to cotton, they all spoke with the same tone, either warning that the risks were too great or asking us to consider the domestic environment more.

It seems that if we do more, we will push the textile industry into the fire pit, and we don’t think about whether this can be done by the group alone?

And we are not the ones behind this!"

What puzzled him the most was that the National Reserve Bureau was mostly short and actually asked them to follow suit, as if they must advance and retreat together.

"Isn't this a good opportunity to set up a trap? It will be natural and logical, so as not to arouse suspicion."

Li Zehua sneered, "Now as they wish, the futures positions publicly held by the group overseas are all short orders.

Plus a little bit of reluctance, delaying for a few days, just missed the time when the price plummeted, not making any money but losing part of the profit, who knows how many people might laugh at me. "

"What a joke! I think they are the joke! The one who laughs last is the real one."

Even clay figures have tempers. Lin Wenhui has been resisting pressure from all sides these days, and he is so angry that he has no place to vent. Now he sees the price has fallen to a certain level.

He took the opportunity to suggest: "A small half of the strategic reserves of the enterprises under the National Reserve Bureau have fallen into our hands, and the stocks of many overseas countries have also been taken into our pockets.

Through the secret warehouse rented by the Five Military Governors' Office, the group also stockpiled enough inventory. It can be said that more than 70% of the country's spot cotton is in the hands of the group.

If we launch it now, none of the speculative investors will be able to escape.”

"And then? For such a large-scale operation, let alone whether the market will cooperate, the fact that there is a large-scale position cannot be concealed from those who have ulterior motives.

These guys are smart. Once the situation is not right, they will choose to run away. We have to plan slowly, lure them into the trap little by little, and lure them into leveraging more capital investment.

It is best to wait for them to launch a historic rally, and then invest fully in them in an attempt to grab the biggest piece of fat meat, and then close the net in one fell swoop, and try to pull it out in one or two days. "

Li Zehua immediately gave instructions, "The spot market should take advantage of this period of decline to continue to buy goods around the world, buy as much as possible, and replenish inventory in preparation for September.

In the futures market, continue to hold short positions to confuse opponents.

You can't eat hot tofu in a hurry. The number of over-the-counter bullish options controlled by the group is several times that of short positions, but it does not directly intervene in the market and is scattered among hundreds of financial institutions around the world.

No one can figure out all the information in a short time, so let them have some fun for a while."

Lin Wenhui was helpless, but since his boss had said so, he could only follow Li Zehua's idea and assign tasks to the investment department...

Yao Xiangjun was even more helpless when he received the news, "What is the boss doing? We were making good profits by going long, but now we are going short when the market is falling.

Now the price continues to stabilize and fluctuate sideways, but the cotton inventory in the market is in short supply, which is in sharp contrast to the decline in the futures market.

The cotton purchase price in some areas of Shandong Province is even inverted from the futures price, which is a clear signal of an expected increase in prices.”

“What do you know, have you ever traded futures?

It is common for spot market and futures prices to be inverted.

Could it be that you alone are better than so many economists and financial experts?"

How could Lin Wenhui dare to tell him the truth? Currently, only three or four people in the entire group knew about this grand strategy, and he could only rely on his authority as the group's chief financial officer to put pressure on them.

"This is a joint decision between the chairman and me. You have to execute it even if you don't understand it. I will take responsibility if there are any problems."

Yao Xiangjun was helpless, "Then we can't continue to increase our investment in short positions in China, right?

Especially in the September delivery period, one-fifth of the short orders traded every day are held by the group. "

"That's just how much money it is. The trading volume for the September period is less than 1/10 of that for the July period. Even if we lose, it's just a small amount. Besides, we're still making a profit now. Just do as I say."

Faced with Lin Wenhui's unreasonable remarks, Yao Xiangjun could only settle for the next best thing, "I am not very familiar with futures speculation, but I do understand hedging risks.

Since the company is determined to short sell, can I apply for additional funds for acquisitions in the cotton refurbishment market?

By hoarding a batch of second-hand cotton, if the price reverses and soars in the future, it can also make up for some of the losses. "

When Lin Wenhui heard this, he was very unhappy, "You are so capable, but the company's decisions are useless when they come to you, right?

Remember, take care of your own business and don't talk beyond your authority. I am the co-CEO of the group responsible for financial affairs, and Qingyun Investment is still working under my leadership."

Regarding the distribution of power within the company, Yao Xiangjun also became anxious, "I insist that my point of view is not wrong, and I cannot accept your willful behavior, which will damage the interests of the company.

I reserve the right to appeal to the chairman.”

"It's up to you. Tell me what you want."

Lin Wenhui hung up the phone angrily, then called his assistant over, found an excuse to scold him, and sent cordial greetings to Yao Xiangjun and his family...

These days, the things that can't be kept secret are the so-called secrets. Within two days, rumors were flying around that Qingyun Group's Chief Financial Officer Lin Wenhui and Qingyun Investment's President Yao Xiangjun were fighting.

Yao Xiangjun went to Li Zehua to apply for funds to purchase second-hand cotton, but only received limited approval...

"You are indeed rich. You just spent 200 million yuan to buy second-hand cotton in the market, and then refurbish it and sell it to textile companies to confuse the public."

When the senior leader of the Development and Reform Commission heard the news, he also called to inquire about the inside story.

Li Zehua, who was working in cahoots with the Development and Reform Commission and the State Reserves Bureau, laughed and said, "Nothing can be hidden from the leaders. There's nothing we can do about it. He asked for 1 billion yuan, which is too much.

It would be easy to expose Pinxixi’s plan to purchase second-hand cotton in rural areas across the country. If the news gets out, I will suffer a great loss.”

"You have too many tricks up your sleeve, and you are so slippery. Who can let you suffer any loss?"

The head of the Development and Reform Commission was almost amused, "Okay, let's get down to business. Your agreement promising a guaranteed minimum has been approved. The Agricultural Office and the State Reserves Bureau have decided to use strategic funds.

In the form of subsidized loans, the funds will be directly transferred from the State-owned Assets Administration..."

To put it bluntly, this is the reward.

An additional benefit to reward Qingyun Group for adhering to the bottom line in July and not launching a harvest war prematurely.

With the cotton reserves currently in Qingyun's hands, if they are sold together with the national reserves, the price can be brought down quickly. The key point behind this is that countless farmers and small and medium-sized textile companies will suffer.

Farmers find it unprofitable to grow cotton and will lose their enthusiasm for planting next year.

As for small and medium-sized enterprises, they will lose all their money if the inventory they bought at high prices plummets.

The big overseas investment banks and the four major grain traders who are eyeing them covetously will certainly not admit defeat and will surely make a comeback, which will then be even more difficult to deal with.

So revealing the truth in July will only postpone the conflict.

Only by waiting for these people to flood into the market, pushing up the price of cotton to a sky-high level, and then suddenly taking action, can we deal them a fatal blow.

September is the time for the final battle! (End of this chapter)