Beware Of Zheng Cotton Speculation Can Not Be Blindly Pursued.

After a long period of bottom dormancy, Zheng cotton seems to have a turning around. CF2001's main contract price has risen from 11970 yuan / ton low to 12830 yuan / ton in just a week, up 7.2%. Unfortunately, the good news is not long. There is a callback under pressure. Sometimes a line breaks the pattern and changes cognition. Sometimes a Yin line can also disturb the pattern and shake the disk.

Yesterday, someone asked the author whether Zheng cotton could catch up with the list and wait until today to see it again. I don't think I need to answer this boring question anymore. This round of Zheng cotton continued to rise a wave, indeed aroused market concern, after a relatively long period of relative bottom shock, this rise seems to give market investor confidence, plus some good news, the rise seems reasonable.

However, after careful analysis, the author believes that this round of rebound is mainly caused by the North Xinjiang's reduction in production and the substantial progress made in Sino US economic and trade consultations. Of course, whether these two factors can be fully landed is questionable.

According to some Xinjiang research group, North Xinjiang is expected to reduce production by 10-20%, with an average yield of about 50 kg per mu, while the output in southern Xinjiang is basically stable. Judging from this feedback, the rate of reduction in production is not small, which seems to cause waves to the market. Judging from past statistics, the output of Northern Xinjiang is lower than that of the southern Xinjiang. Under the premise that the output is basically stable in the southern Xinjiang, the impact of the North Xinjiang's reduction on production is limited. Moreover, the actual output needs to be further verified.

In addition, the rebound is related to the Sino US economic and trade consultations. In the case of "beating, talking, talking and beating" for more than a year, the United States and China have been able to get the same and the opposite direction. Naturally, the market has been encouraged. But we should also see that the US side has not abolished tariffs imposed on China, but has postponed the increase in tariffs. This should keep the market vigilant. There is still a long way to go for a complete settlement of Sino US economic and trade relations. As investors, we should also be cautious about this news. Otherwise, it would be more harm than good to take a stone to hit our own feet.

Looking at the downstream demand, although the textile industry is in the golden period of "golden nine silver ten", but the basic business is to maintain production. There is a big gap between the textile companies and the same period last year.

Under the influence of Sino US trade friction, the domestic textile industry has indeed encountered difficulties, and the transfer of production orders is an indisputable fact. From the relevant foreign trade data, we can see the fact of decline.

According to the Vietnam textile and Apparel Association (VITAS), exports of textiles, fabrics and fabrics in Vietnam amounted to US $25 billion 700 million in the first 8 months of 2019, up 8.6% from the same period last year, of which foreign direct investment accounted for 60.6%. It is worth noting that Vietnam has become the world's third largest exporter of textiles and clothing, second only to China and India.

This increase or decrease has clearly told us that under the relatively stable supply situation, downstream consumption is still under heavy pressure. At the present stage, it is absolutely undesirable for cotton to catch up and fall.