Forecast Several Possible Trends Of Zheng Cotton In The Near Future

From the speculation on the reduction of production, the gap between supply and demand and the difficulties in the sale of new cotton, Zheng cotton CF1909 experienced a two month cooling down from the beginning of the new cotton market in the early October 2018, reaching 15500 yuan / ton by the end of November 2018, and the first round fell by over 1000 yuan / ton.

The $200 billion tariff completely defeated the confidence of the market, and helped to make the market go short, and even hit two down boards. When it came to 14000 yuan / ton, after the concussion and rest of 5 trading days, just as most people estimated to rebound, the 22 day approached the close. A sharp fall in the US disk led to the direct stop of Zheng cotton. Although the limit was opened, the second day still set a new low of 13245 yuan / ton. From the end of November last year to May 10th this year, despite all kinds of news, it has been fluctuating around 15500 yuan / ton and running in the range of 15000-16000 yuan / ton until the United States adds to Chinese products.

I think there are several possibilities.

In addition to output, the Sino US trade war is the biggest factor affecting the cotton market.

The influence of Sino US trade war on Zheng cotton and Mei cotton is different.

The trade war will reduce China's textile exports to the United States. Due to the large volume, no other countries can replace it, and directly reduce domestic cotton consumption.

Trade wars will reduce China's imports of US cotton, but the amount is relatively small, and the world's cotton consumption will not decrease. The amount of China's reduction will soon be replaced by Vietnam, India and Pakistan.

Based on this, US cotton may take the lead in rebounding. Later, Zheng cotton may still have a fall, and the difference between inside and outside cotton will shrink, or even hang upside down.

After consolidation or usher in the last fall.

The biggest advantage behind is the continued escalation of trade wars and tariffs on the remaining 300 billion. On June, 28-29 is the G20 summit. There is still 1 months to go. The market parties have great hopes for the summit. However, from the previous US practice and recent situation, the first is the resumption of negotiations without time table, and two is the expansion of battlefields into technology enterprises, which has gone beyond the scope of trade wars.

The possibility of increasing the remaining 300 billion will increase. The first two tariffs actually have little impact on domestic cotton consumption, but only psychological and confidence damage. The remaining 300 billion includes all textile and apparel exports to the United States. Once implemented, the domestic cotton consumption will be substantially reduced, and the futures market is bound to have a big drop. The two wave falls two yuan / ton in the front. If the wave falls 1000 yuan / ton, it will reach 12000 yuan / ton, but this decline may be the last drop.

The reason is the last drop, because if Zheng cotton continues to drop to about 12000 yuan / ton, on the one hand, the state should take measures to stabilize the market; on the other hand, after the fall of Zheng cotton, the difference between domestic and foreign prices will shrink or even hang upside down, which will also enhance the export competitiveness of Chinese textiles, increase exports and cotton consumption, and make cotton prices better.

After consolidation, ushered in.

If the summit comes to the news of truce or armistice in trade war, the total tariffs will be abolished or phased out, which is a great benefit to the cotton market, and domestic and foreign futures will go up.

Shock consolidation.

If the summit decides to resume negotiations, the existing tariff will remain unchanged, and the remaining 300 billion will not be added. This result is relatively neutral, and the market will shake up with the news of the negotiations and the weather conditions in the cotton area, waiting for the direction of the news negotiations.