Since March, commodity prices have begun to climb slowly. The worst may have passed, and the road to recovery will be bumpy. As far as the cotton market is concerned, gradual recovery is the trend, but in the short term it is still affected by poor external demand, and the industry’s performance remains negative.
In terms of the textile market, according to participants, domestic sales were blocked in the first quarter, and export sales suffered a large number of defaults in the second quarter. Halfway through the third quarter, recovery of the market is still expected. On the industrial side, there is a strong sense of caution and little enthusiasm for chasing prices, and the focus is on the recovery of orders. Commodity futures prices are undervalued, and the rising pace lacks favorable support, failing to stimulate speculative demand in the industry in the short term.
In fact, after the international epidemic, the situation at the domestic weaving end has not improved significantly. There was a phased improvement in May, which continued to fade from June to July. Inquiries and closings increased in August. It is expected that seasonal demand orders will increase, and it is necessary to closely track the terminal market situation.
At present, the performance of weaving mills’ order repair is insufficient. The market is looking forward to autumn orders. The production reduction of spinning mills continues, and the willingness to stock up on cotton is still not high.
“The epidemic problem has not been effectively solved, and market uncertainty still exists.” Zheng Shengwei, head of the cotton textile industry chain of Huarui Information, said that the arrival of seasonal demand nodes for textiles and clothing and the suppression of consumption by the epidemic have dual effects. A short-term recovery in orders is expected, but the core issue remains unresolved, and prices and orders may still move forward in oscillations. Midstream and downstream companies should prepare for next year. In the autumn and winter, the main tone of products is inventory reduction and fast in and out.
“In the long term, demand is gradually improving. Both existing data and market deductions show that the demand side is gradually improving. The market is also paying attention to the production situation in the next year. In the new year , production dropped while demand recovered. In this USDA report, the yield was significantly increased despite poor weather and poor quality rates, which also gave room for the market outlook. In addition, the locusts in India also have a story to tell.” Dadi Futures Analyst Lan Official Li Qing said so.
Participants believed that in the short term, cotton prices will still mainly oscillate, with the bottom rising continuously. It is recommended to go long on dips and operate in a band. </p
