Exclusive news from China Cotton Network: On April 3, the number of confirmed cases of the global epidemic increased rapidly, constantly setting new historical records. After countries have implemented strict prevention and control measures, the peak number of confirmed cases seems to be getting closer and closer, which indicates that the world is approaching The toughest moments. As market economic activities hit the bottom, the cotton market will also face an extreme stress test. Will it continue to create new historical lows, or will it stop the decline and return to normal?
It is futile to continue analyzing various fundamental data at this time. The macro changes caused by the epidemic can even more affect the direction of cotton prices. At a time when the market is extremely pessimistic, current predictions from medical experts may bring confidence to the market. An analysis by the University of Washington School of Medicine predicts that the peak of the epidemic in the United States will arrive in April, and that COVID-19 may cause 81,000 deaths in the United States. Real-time statistics released by Johns Hopkins University in the United States show that as of 06:30 on April 2, Beijing time, a total of 213,372 cases have been diagnosed in the United States, making it the first country in the world with more than 200,000 confirmed cases. The United States is currently the country most severely affected by the epidemic. As the world’s largest economy, if the epidemic in the United States can be stabilized in April, it will be crucial to the world economy.
According to Shenzhen Satellite TV, Academician Zhong Nanshan said in an exclusive interview on April 1 that he believed that as various countries take strong measures, the global epidemic can be controlled. “I estimate it should be the end of April.” Around this time, the epidemic should be over.” According to this prediction, the turning point of the global epidemic may occur in April.
The dawn of the cotton market seems to have emerged, but the downstream production and export situation is still not optimistic. According to data from the Cotton Textile Association, at the end of March, the production recovery of large cotton textile companies continued to improve. However, affected by the global epidemic, corporate business confidence was once again frustrated, and the capacity utilization rate changed from a gradual increase to a slight decline. Since March 24, foreign orders have been canceled and postponed one after another. It is expected that export volume and export volume will fall sharply, and companies are faced with reducing their opening rates.
According to a survey by the China Home Textiles Industry Association, starting from March 18, many export companies received notices of delayed shipments from European and American customers, and some overseas customers canceled orders for the past two months. As textile companies reduce the proportion of production shutdowns and the pressure of oversupply of raw materials further increases, the market is full of doubts about whether the cotton market can survive the darkest month of April.
Domestic Zheng cotton prices have fallen to near historical lows. According to general rules, there is limited room for continued sharp declines. However, we must be vigilant. The impact of this epidemic is far greater than that of 2016. The price of cotton has once again fallen below the 10,000 yuan mark, and the probability of even continuing to fall still exists. In particular, it is important to see that there is still a lot of room for downside in U.S. cotton ICE relative to historical lows. Regardless of the low of 28.20 cents/pound in 2001, the 38.45 cents/pound in 2008 alone was enough to scare the market. We must know that the global crisis caused by this epidemic is greater than that of 2008. Many market participants believe that 48.35 cents/pound is far from the lowest point for US cotton.
According to predictions from medical professional organizations, the domestic epidemic in the United States will not reach an inflection point until at least mid-April. As long as the epidemic in the United States does not reach its limit, At the pressure position, market panic has not yet reached its extreme, and the moment for cotton prices to rise and fall has not yet arrived. Therefore, US cotton still has downward momentum, and Zheng cotton is no exception.
Some economists believe that this crisis was caused by the epidemic. The U.S. and world financial systems themselves are relatively stable. As long as the epidemic is under control, the market will show signs of recovery as soon as possible. Compared with the 2008 financial crisis, it was caused by the risk of a run on the U.S. financial system that spread to the world. The causes of the two outbreaks were different. The stability of the financial system now is higher than that then. As long as the financial system does not collapse, the world’s operating order will not be stable. Big problems will arise, and the crisis caused by the epidemic will reach a turning point soon.
Looking at the country, after the resumption of work and production, there are still some industries that have been greatly affected by the epidemic, such as tourism, hotel industry, and catering industry. It should be noted that my country is the world’s largest exporter of textiles and clothing and a major exporter of hotel textiles. In addition to the reduced demand for clothing, the impact of the epidemic is also expected to see a significant decline in orders for hotel textiles. At present, it seems that the first wave of golden production period of textiles has been missed. This part of the orders has been permanently lost and cannot be made up. It is also very important for enterprises to seize the second golden period of the “Golden Nine and Silver Ten” this year.
It is understood that downstream textile companies are currently studying and formulating various methods to deal with the reduction in orders, even if the market finally faces a second extreme pressure</p
