Zheng cotton futures continued to fall last week. The main CF2109 contract once fell below 15,500 yuan/ton and hit a low of 15,300 yuan/ton. However, the situation changed this week. It opened higher on Tuesday and moved higher, with the intraday high reaching 15,750 yuan. /Ton. Zheng cotton rebounded from an oversold situation, and some investors called for bargain hunting again. Under the current complex background of domestic and foreign financial markets, whether cotton prices can rise sharply in June requires attention to the following points:
First of all, Zheng Cotton’s oversold rebound may be a normal performance after digesting the pressure brought by the fall in commodity prices, or it may be boosted by the recent decline in the U.S. dollar and the increase in U.S. grain prices, but in terms of fundamental structure , domestic supply and demand are basically stable, and the high production and sales rates of downstream textile companies have a strong supporting effect on the market. Against the background of the off-season in June, the expected decline in terminal orders will weaken its bottom support.
Secondly, the key point of current market transactions is still inseparable from the assessment of next year’s cotton production. In the first quarter, most market participants had expectations for a decline in the cotton planting area in the United States. However, excessive rainfall in Texas in May reduced the market’s expectations for a bullish report on the actual planting area of U.S. cotton at the end of June. However, the recent severe drought in Brazil and the raging epidemic in India may cause new cotton production to decline. Entering June, some market participants in the United States also began to worry about the impact of hurricanes. Recently, the National Oceanic and Atmospheric Administration (NOAA) suggested in a report that the impact of hurricanes this year may be lower than last year, but the warning preparation stage should now be entered. In addition, the growth of domestic Xinjiang cotton in the seedling stage is unfavorable, which may still be the subject of potential bullish speculation.
Furthermore, hidden concerns about the fiscal stimulus policies adopted by governments to alleviate the COVID-19 epidemic continue to emerge. Although the Federal Reserve has repeatedly downplayed the risk of inflation, countries must prevent imported inflationary pressure. Response strategies will be adjusted according to their respective economic conditions, which will also have an impact on the entire cotton textile market.
Therefore, while there are differences in epidemic prevention and control, there will also be great differences in macroeconomic control across countries. The order of cotton production, trading, consumption and circulation will be restructured, and the market It is becoming increasingly difficult to reach an agreement on expectations, and the trend of the cotton market may be constrained as a result, and the possibility of hitting another high in the short term has declined. </p
