On Tuesday (March 9), ICE cotton futures plummeted by nearly 4.5 percentage points and finally closed at the limit. On the 10th, Zheng cotton fell sharply at the opening, with the main contract CF2105 hitting a low of 15,330 yuan/ton. Recently, domestic and foreign cotton has continued to fall and has sharply given back its previous gains. Does this indicate that a downward trend has formed?
First of all, in terms of absolute prices, domestic and foreign market prices have dropped to the starting point of the upward trend after the Spring Festival. The Zhengmian CF2105 contract is below 15,500 yuan/ton, which is regarded by many market participants as a golden range for establishing long opportunities. At the same time, some industry insiders believe that the cotton market has been overly hyped in the early stage, the market bubble is too large, the macro market mentality is unstable, the stock market atmosphere is poor, coupled with the ups and downs of oil, chemical fiber raw materials have also fallen sharply, and cotton prices may still have room to fall.
Secondly, last night, the US Department of Agriculture released a global cotton supply and demand forecast report for March. Global cotton production was reduced by 180,000 tons to 24.672 million tons; global cotton consumption increased by 55,000 tons to 25.574 million tons. The ending cotton inventory was reduced by 249,000 tons to 20.595 million tons; however, the decrease in U.S. cotton production and inventory was less than expected. It was suppressed by speculative selling and position adjustments, and the downward trend of the external market is inevitable.
Furthermore, all parties in the market expect cotton demand to rebound this year. However, whether it is based on USDA report data or domestic agency balance sheets, domestic demand has basically returned to normal year levels. Under the current epidemic background, it is very difficult to It is difficult to have room for a substantial increase. Therefore, before global cotton planting is completed in the new year, the supply and demand situation is still difficult to determine.
At present, Zheng Cotton has experienced a deep correction, but downstream production and sales are smooth, which may support the continued decline of cotton prices. It is still too early to conclude that a downward trend will form. An oversold rebound cannot be ruled out in the short term. </p
