There is no doubt that the epidemic has had an impact on the cotton market. From the recent spot price trends, we can clearly feel that before the epidemic is completely defeated, the pressure on cotton prices is still relatively high. Of course, in the short term It is not ruled out that funds go against the trend (the 28th theory tells us that this phenomenon may happen).
From a fundamental point of view, when supply is basically stable, the result of reduced consumption will inevitably be falling prices. The epidemic has had a certain inhibitory effect on cotton consumption. The longer the epidemic lasts, the greater the impact on consumption.
According to the forecast of the National Cotton Market Monitoring System, domestic cotton consumption in 2019/20 is 7.5889 million tons, and combined monthly consumption is basically 630,000 tons. If the epidemic affects consumption for half a month, the monthly consumption may be around 300,000 tons. The longer the period, the greater the impact, and the more difficult it will be to make up for it later.
Of course, the impact of the epidemic on different regions and industries is different. At least in that month, cotton prices should be under pressure to decline. We know that the rise and fall of cotton prices are just symptoms, and the main factors behind the rise and fall of prices are the truth. There must be a reason behind the trend performance of each K-line of Zheng Mian. Weather, fundamentals, finance, economy, policy, capital, etc. may all affect it. It is by no means an unreasonable rise and fall.
Before the Spring Festival, Zheng cotton showed strong performance and continued to rise. At that time, the production order situation of downstream textile enterprises was very good, and cotton prices were strong under the support of fundamentals. Affected by the epidemic after the holiday, all companies are in a state of suspension of production under a certain supply situation, and the reduction in demand will inevitably lead to a decline in front-end cotton prices. Of course, after the oversold situation, cotton prices quickly rebounded to more than 13,000 yuan/ton. As for whether it can return to a normal value range in the future, it depends on the cooperation of other factors.
We lengthened the K line and basically saw that the cotton price fluctuated around 15,000 yuan/ton most of the time. It did not take long to run significantly below this price. This does not mean that cotton prices are bullish in the short term, because in the absence of new speculation factors, the negative impact of the epidemic will continue, and the low, weak and volatile trend will remain in February.
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