After the short May Day holiday, U.S. cotton fell back to around 53 cents/pound, and the main contract of Zheng Cotton 09 also opened lower. Under the premise that the global epidemic has not yet been contained, The recovery of terminal consumption will still take a long time, and the trend of cotton prices is hardly optimistic.
When the market was at its most pessimistic, cotton prices briefly fell below the 10,000 yuan mark, and then rose back up, indicating that the bottom support was strong. In previous articles, the author has analyzed that cotton prices will fluctuate for a long period of time, with limited room for rise and fall. Today’s low opening is not necessarily a bad thing, and tomorrow’s high opening is not necessarily a good thing.
May is the traditional off-season for textile enterprises. Enterprises’ willingness to purchase is low, and weak purchasing and sales cannot support a large increase in cotton prices. The historical K-line of Zheng Cotton also proves that the number of price drops in May was significantly more than the number of price increases. Therefore, in the author’s opinion, the decline during this period is quite normal. After all, raw material sales are in the off-season, and unless a weather disaster occurs during this period, it will be difficult for prices to rise. For example, in May 2018, many cotton fields in southern Xinjiang were hit by bad weather and cotton seedlings were severely damaged. Funds fueled the situation and pushed the price to a high of more than 19,000 yuan/ton. However, after all, short-term speculation could not support the high level. In the end, cotton prices were at In June, a three-year long bear market began.
The current cotton market is elusive. Yesterday it was “green”, but today it may be “red”. Especially when the trends of bulk commodities such as crude oil are confusing, the difficulty of judging the trend of cotton prices has also suddenly increased. . Sometimes it is the best strategy to preserve strength and stay away from the market. Just like the current cotton price, it is difficult for speculators to be long and short. Short selling faces low risk, and long selling faces time and investment cost-effectiveness issues. In this case, for retail investors, waiting and watching may be the best strategy. </p
