In mid-May, Zheng Cotton experienced a wave of diving. The price of the main CF2109 contract fell below the integer mark of 15,600 yuan/ton (the intraday low was 15,510 yuan/ton). In just two trading days, it fell 845 points, a drop of 845 points. 5.17%), causing a certain degree of panic among cotton processing companies and traders with low hedging rates. Although it rebounded at the key support point of 15,500 yuan/ton, it was obviously limited in its efforts and lacked confidence in raising prices. The short-term long and short sides continued to be in a stalemate at 15,500-16,000 yuan/ton.
From the analysis of cotton-related enterprises and institutions, the reasons for the failure of this round of Zheng cotton’s trial price of 16,500 yuan/ton are nothing more than the following points: First, ICE and bulk commodities Futures fell overall (especially corn, soybeans and other agricultural products and black products collectively fell); secondly, the epidemic in Southeast Asian countries such as India and Pakistan was ignited, and the reappearance of local cases in Anhui and Liaoning in my country caused market concerns; thirdly, the central bank’s monetary policy remained unchanged in May With stability at the forefront, the expected easing of monetary policy has failed; fourth, the recent warehouse receipt registration and effective forecasts have continued to grow, and the pressure on Zheng Cotton’s firm market has increased. According to statistics, as of May 17, Zheng Cotton warehouse receipts reached 21,417, which was only lower than the 5,350 receipts in the same period of 2019/20, a significant decrease from March and April.
The author judges that the main contract of Zheng Cotton will rebound against 15,500 yuan/ton, and the center of gravity of the market will still return to 16,000-16,500 yuan/ton consolidation, so it is not advisable to be overly bearish.
First of all, the recent weather in Xinjiang has become the key to capital speculation. The Xinjiang Meteorological Bureau forecasts that from the daytime of May 19th to the night of May 22nd, there will be heavy rain (snow) in mountainous areas in Yili Prefecture, Tacheng region, Altay region, Urumqi City, Changji Prefecture, Hami City and other places, and the temperature will drop in northern Xinjiang and eastern Xinjiang. Around 8℃, with a partial drop of 8-12℃, which will have a negative impact on the growth of crops in the seedling stage in northern Xinjiang; secondly, textile companies will be more able to withstand and digest cotton prices. Since May, the sales volume and price of cotton yarn, gray fabrics, etc. have increased. In particular, the production and sales of conventional yarns such as C40S, C32S, and C26S have performed satisfactorily. The operating rate and production and sales rate of cotton spinning enterprises are at a relatively high level, and the inventory of finished products is low. Finally, as the global epidemic continues to spread, Agricultural production may continue to be affected. Coupled with the bad weather in the main cotton-producing areas and the recovery of consumption and economy in Europe and the United States, agricultural products still have upward momentum. </p
