Recently, the commodity market has been in turmoil, with prices continuing to plummet, and cotton is no exception. Just when the domestic epidemic has been basically stable, the spread of the global epidemic has cast a shadow on the market. How to interpret cotton prices in the market outlook? Some people say that “the price will not be affordable as long as the epidemic continues.”
The author believes that this crisis is undoubtedly a great benefit to the majority of investors, because only in such a major event can commodity prices (including cotton) reach such low levels, so there is no need to panic excessively. The price of cotton in Zhengzhou was eager to test before the holiday. The CF2009 contract price had a tendency to rise to 15,000 yuan/ton. However, under the “care” of the epidemic, cotton prices continued to dive, with the lowest falling to 12,650 yuan/ton. In less than two weeks, cotton prices It dropped more than 2,000 points, and the market shock exceeded most people’s expectations. At this time, some people panicked and closed their positions, while others took the opportunity to jump into the rare “golden pit”. In the same crisis, some people rush to avoid risks, while others boldly buy. The same market situation, different analysis angles lead to very different results.
Regardless of whether it is right or wrong, it is reasonable to observe carefully that this round of rising prices has its own reasons. The epidemic abroad has shown some improvement. South Korea, Japan, and Italy, which are the most severely affected, have raised their epidemics to the highest level. This means that The epidemic is attracting the highest attention from the government and the whole people. Domestic epidemic prevention and control has proven that as long as the government pays enough attention and takes the strongest prevention and control measures, the epidemic can be controlled. Some people also believe that due to differences in political and cultural systems, it is difficult for foreign countries to adopt such strong prevention and control measures as our country. The author believes that at the critical moment of life and death, people have the same desire for life, and their prevention and control capabilities cannot be underestimated or even doubted. Therefore, there is no need to exaggerate the impact of the epidemic.
Of course, the current global epidemic will indeed have a negative impact on the cotton market, because suppressing consumption will inevitably lead to price declines. In the market-oriented price operation mechanism dominated by supply and demand, supply and demand will inevitably Re-playing the game will produce a new equilibrium state, and this equilibrium will appear in the form of new prices. The price is stable, indicating that the new price formed has been recognized by the market, otherwise it will continue to fluctuate and adjust until it stabilizes.
Before the epidemic, the CF2009 contract price basically fluctuated around 14,000 yuan/ton. Now affected by the epidemic, the price has dropped to around 13,000 yuan/ton. It can be seen that in the short term, the price decline has prompted the supply and demand of the cotton market to reach a new equilibrium. But how long can this short-lived equilibrium last? Before the financial crisis broke out in 2008, cotton prices fluctuated around 16,000 yuan/ton. After the financial crisis broke out, cotton prices fell to a low of 10,080 yuan/ton. It took nearly 8 months for cotton prices to fall by nearly 6,000 yuan/ton. Then it took 5 months for cotton prices to return to 13,000 yuan/ton (an increase of about 3,000 yuan), and nearly a year to return to 16,000 yuan/ton (an increase of about 6,000 yuan). This shows that in the face of such a serious global economic crisis, cotton prices will be at the bottom for a limited time.
This time, cotton prices basically did not continue to fluctuate after falling, and rebounded directly. Of course, on the one hand, governments of various countries have introduced interest rate cut policies to save the market by “releasing water”; on the other hand, in view of previous experience and rules, price returns will be a matter of sooner or later, so don’t worry too much. Earlier, some people kept shouting that the cotton price could reach 11,000 yuan/ton, and they were waiting desperately to buy the bottom, but the market just refused to give them a chance. The reason is very simple. Both the long and short sides are playing a game. Once the public forms a consensus on the decline of originally low-priced commodities, the market will tend to move in the opposite direction. The 80/20 law tells us that the truth is often in the hands of a few people.
To sum up, the downward momentum of cotton prices has weakened and the upward force is strengthening. Of course, due to demand constraints in the short term, prices will fluctuate repeatedly, but the author believes that if the cycle is extended, future cotton prices can be expected. </p
