Since April, the global financial market has shown a rebound pattern. The three major U.S. stock indexes have rebounded by about 20%, but there is still 20% room to repair from the highest point of this round of decline. The domestic commodity futures market is booming on a large scale, and the price of Zheng cotton has also bottomed out and rebounded. But how will the next trend be interpreted? Will the rebound be sustainable and turn into a reversal? This is a common focus for the author and people in the industry, and the author will discuss this with everyone.
First of all, the current rise in Zheng cotton is probably due to the joint action of the following four main factors. First, the global epidemic rate of new infections has slowed down. After the European epidemic slowed down, the overall number of new confirmed cases in the United States fell for the first time on April 5. U.S. President Trump pointed out on April 6 that the hospitalization rate in the United States began to show signs of stabilizing. , and stated that they are still considering restarting the economy, and the “slowing down” epidemic data has injected considerable confidence into the market; secondly, the crude oil market has restarted negotiations, and the market is hopeful that the production reduction agreement will be reached. Affected by this, the rebound in crude oil prices has driven the global The preference for economic wind direction has returned; third, a series of economic rescue policies launched by various countries in the early stage have begun to take effect. The actual effect may not be ideal, but it is undeniable that it plays a certain supporting role in the economic market; fourth, short positions are profit-making, and Zheng Cotton fell to historical lows, and the weakening of bearish power caused prices to rise. Some economists say that concentrated short-selling is often an important force pushing up prices in a bear market, and is often stronger than bulls who actively go long.
Secondly, what is the future trend? At present, the fundamentals of cotton are relatively clear, but there is still great uncertainty in the external economic environment. First, the turning point of the global epidemic may not really come. There is news that the decline in new confirmed cases in a single day may be caused by the United States lowering the number of daily tests. Judging from the test diagnosis rate, the United States is still at a relatively high level of confirmed cases. rate has not changed significantly. When there are doubts about the number of newly diagnosed cases, we should maintain a more cautious attitude towards the so-called “inflection point”; secondly, the crude oil market may only reach a short-term favorable agreement, and the biggest highlights this week may focus on today and tomorrow (April 9 -10) The performance of oil prices after the meeting, analysts pointed out that although the market has a high voice for production cuts, due to the mutual game between the negotiating countries’ own greater interests, this negotiation still faces many obstacles to achieve a rapid reversal of the market. A long-term agreement on a declining trend may be difficult; third, the fundamental performance of cotton is not optimistic. Current downstream consumption is the key factor leading the trend of cotton prices. The supply of upstream cotton this year is basically certain. The author once published a conservative estimate that cotton consumption this year is expected to shrink by 100%. More than 10,000 tons. As reflected by the domestic resumption of work and production, the recovery of overseas cotton consumption may still be delayed for more than two months after the epidemic reaches an inflection point. Coupled with the downward pressure exerted on yarn prices by foreign trade orders from external to internal, the performance of the textile industry is not optimistic. .
The final conclusion of the author is that the development of the epidemic is still racing against time. The turning point of the epidemic has not yet been reached, and the short-term positive effect may only remain “support without action”. This is based on the current cotton market. Under stable circumstances, the market is sensitive and fragile. Once a major negative event occurs, the cotton market may have difficulty holding on to the rebound space, which is the so-called “easy to attack but difficult to defend.” As for the reversal, the author can only say that perhaps the market is preparing for the opportunity to strengthen significantly after the epidemic is over, but this will take time and space.
<br
