The S&P 500 index fell by more than 7% last night, triggering the circuit breaker mechanism again. This is the fourth circuit breaker in the U.S. stock market in 10 days. The U.S. stock market’s meltdown has undoubtedly become a hot topic in the global financial community. Currently, the COVID-19 epidemic continues to spread around the world. Countries such as Italy, Iran, Spain, and the United States continue to increase protection levels and investments, but the situation has not been contained.
Vietnam, the largest consumer of U.S. cotton, has also begun to be affected by the epidemic recently. As a result, the US cotton market plunged to its lowest level in more than ten years yesterday. Intraday cotton futures prices for May delivery hit 55.65 cents per pound, the lowest since September 2009. Inevitably, Zheng Cotton also fell sharply at the opening today, once again hitting the historical low in 2016. The CF2005 contract was finally closed at 11,095 yuan/ton. Before the Spring Festival, the CF2005 contract once surged to a high of 14,450 yuan/ton. In less than 2 months, Zheng Cotton fell by nearly 3,000 points, leaving cotton practitioners in tears.
According to recent follow-up surveys, cotton-related trading companies generally report that futures continue to fall, and the decline is rapid, and spot prices are adjusted. I can’t keep up with the speed. As soon as some customers placed orders, cotton prices dropped one after another, causing customers to continue to regret their orders. Repeatedly, customers simply stopped placing orders. Individual spinning companies said that according to usual experience, cotton is now at a low level. When the price fell below 12,000 yuan/ton, they bought a little at the bottom to replenish their stocks. But I didn’t expect that it would fall so sharply, and I would never buy the bottom again. Market buying interest has been hit, and cotton-related traders are even more miserable. Not only is it difficult to sell lint, prices continue to fall, and some companies have already lost money and resorted to pledging to survive.
In addition to the heavy blows suffered by cotton trading companies, cotton ginning companies are also hard to escape. Some companies that have not completed lint processing and sales before the Spring Festival are currently facing a dilemma. If the sale of the remaining lint is not completed as soon as possible, subsequent loan repayments will be a problem. If the sales are now not only a loss, but also unable to find a successor. Even if we wait and see, the storage fees, financial costs, etc. will all be borne by the processing companies for several months. Therefore, cotton prices continue to hit record lows, and the upstream and downstream cotton industries will have to face a major reshuffle. </p
