At present, most commodities have reached historic lows, and some varieties have even fallen below the lows since the 2008 financial crisis. Under the temptation of the “gold pit”, some bargain-hunting investors are ready to make a move. Looking back at Zheng Mian’s historical trend, it is indeed very tempting to see the point of 10,000 yuan. Can prices dip now?
Investment guru Warren Buffett said that you should be greedy when others are fearful and fearful when others are greedy. There is nothing wrong with this. After every market catastrophe, there are always a very small number of people who buy the bottom and become successful. But after all, they are rare and the vast majority of ordinary people are just meat on the chopping board.
Living is the most important thing now. There is a famous saying in “Alive”: “I know that the dusk is fleeting and the night is falling from the sky. I see the vast land with its strong chest exposed, which is a calling gesture, just like women calling their children, the land calling Night is coming.” Just as the market is waving to investors, the night has fallen. When will the dawn come?
The current cotton situation is weak and volatile. Although it seems to be shaky, it is resistant to falling. The author believes that the more you are in such a situation, the more you must maintain your composure and find a good point before entering, so as not to make yourself very uncomfortable. Even if it is not guaranteed to be the lowest point, at least it cannot be too far from the bottom. If it is very light, Holding a position is a different matter. Because prices will rise sooner or later, even if they don’t rise this year, they may rise next year, as long as you can persist with it.
Currently, domestic and external demand for cotton is very weak, and while the global epidemic has not yet stabilized, it is difficult for consumption to pick up in the short term. The domestic cotton production and demand balance sheet predicted by the National Cotton Market Monitoring System in April shows that cotton production in 2019/20 was 5.843 million tons, a year-on-year decrease of 4.29%; cotton consumption was 7.0336 million tons, a year-on-year decrease of 11.95%, and consumption decreased significantly. Due to the decrease in supply; the ending inventory was 6.3054 million tons, a year-on-year increase of 0.33%, and the inventory-to-consumption ratio increased by 14.12% year-on-year.
The current price of Zheng cotton has reflected the fundamentals of cotton supply and demand in April and the situation of the cotton spinning industry chain. There is also uncertainty in the future situation. On April 17, the National Bureau of Statistics announced that the GDP in the first quarter of this year was 20,650.4 billion yuan, a year-on-year decrease of 6.8% at comparable prices, the first negative growth in many years. The sudden COVID-19 epidemic has had a great impact on my country’s economic operation. In this regard, economist Guan Qingyou believes that the 6.8% negative growth truly reflects the impact of the epidemic on the domestic economic operation. The economic bottom for the whole year has been confirmed and the worst period has passed.
The macroeconomic environment may have improved. The current cotton price is basically at the bottom and the expected recovery of consumption in the future and other positive factors are the confidence for funds to dare to buy the bottom. However, whether the epidemic can be controlled in a short period of time, There is also uncertainty. If the epidemic continues to develop, consumption expectations will be postponed, and economic recovery will take time to buffer and cannot be achieved overnight. Affected by the epidemic, it is foreseeable that cotton consumption will be worse in April. Cotton consumption data in May will be crucial. If there is recovery, it will prove that consumption in April has basically bottomed out. Although the price has risen a bit at this time, the author believes that following the trend is much less risky than going against the trend and catching a flying knife. </p
