The recent cotton market has been mainly stable, with less fluctuations and more calmness. Speculative funds have temporarily lost interest, but the industry has maintained stability, which is conducive to the production and operation of downstream enterprises. Although the market is becoming more and more stable, the market is also indispensable for hype news, which is both beneficial and negative. How cotton will trend in the future, the trend of Zheng Cotton, which plays the role of “weather vane” in its realization stage, has already given the answer.
Looking at the trend of Zheng cotton in the past three months, the CF2101 contract fluctuated between 12,000-13,000 yuan/ton most of the time, which rarely happened in the past, and after occasional breakthrough increases, after In a short period of time, it fell back to the normal range. The traces of false breakthroughs are obvious, which also proves from the side that the pressure from above is high. In the absence of sufficient bullish events, it is difficult to form an effective breakthrough. After all, the epidemic has caused global consumption to shrink, which has dealt a heavy blow to the textile and apparel market.
Now Zheng Mian’s lows are constantly moving up. To describe it in one word, it is a shock upward, which shows that Zheng Mian’s bottom support is very strong. The influence of the epidemic that caused Zheng Mian’s decline is declining. If you want to go further down Breakout runs are also not in line with market demand.
First of all, when the price of Zheng cotton was in the historical bottom range, the downward pressure of market funds was very weak. After all, at such a low level, the downward space was limited, and it was not possible to take great risks to gain small profits. It is in line with the operation method of risk funds; secondly, as an industrial hedging company, it also hopes that cotton prices will continue to rise, giving it new and old cotton hedging opportunities. After all, when the market is likely to fluctuate in a range, hedging operations can be performed at higher prices, which can play a role in hedging risks. For textile enterprises, keeping cotton prices stable also plays a very important role in maintaining the stability of enterprise production. Overall, there is insufficient motivation for shorting cotton prices at this stage, and the room for decline is also limited.
Looking back at the Zheng Cotton K-line, the cotton price has only been running around 12,000 yuan/ton three times, namely in 2008, 2016 and 2020. In the remaining years, the price range has been around 13,000 yuan. / ton or above, on the one hand, it shows that the cotton price is basically at an absolute low level at 12,000 yuan / ton, and on the other hand, it shows that this bottom range has strong support. After all, considering the cost of cotton production, it is unrealistic for the cotton price to be lower than the production cost for a long time.
Regarding the recent increase in confirmed cases in Xinjiang, the author believes that the cotton market will not cause waves, because previous repeated epidemic incidents in Beijing, Dalian and other places have proven that under the government’s strong prevention and control policies, domestic The epidemic will definitely be controlled in a relatively short period of time. Moreover, our country has accumulated considerable experience in epidemic prevention and control and resumption of work and production. Cotton production in Xinjiang will not be disrupted or affected. Of course, some people are worried about the issue of cotton leaving Xinjiang. It will be at least more than two months before new cotton is launched in large quantities and shipped out of Xinjiang. Worrying about it now is a bit unfounded.
In short, the cotton price fluctuates in a small range. As for how long this pattern can last, we have to wait and see how it changes! </p
