How Does The "Locust Market" Follow Up?

"All of them are caused by desert locusts. At present, although Pakistan's cotton harvest in 2019/2020 has been completed, India has gained more than half of its cotton this year. However, many investors believe that the 400 billion locust locust gathered in these two countries will have a negative impact on local cotton production, especially in India and Pakistan, cotton and sugar cane planting in the year of 2019/2020. The formation of more serious damage. " Guangdong Cotton Traders weekly told the futures Daily reporter, this is the main reason for yesterday's cotton futures price limit, but also to boost the main reason for the rise in sugar futures prices.

The locust disaster in India has basically ended.

India's cotton, sugar and cotton production in Pakistan occupy a more important position in the global market. This is the main reason why the desert locusts have taken off the cotton and sugar prices at a time, but the locust disaster in India has ended.

The monthly demand and supply report of agricultural products released by the US Department of agriculture in February showed that cotton production in Pakistan was about 1 million 440 thousand tons in 2019/2020, increasing by around 110 thousand tons, accounting for about 5.44% of the total cotton output in the world. Cotton production in India was about 6 million 420 thousand tons in 2019/2020, which was flat, accounting for about 24.31% of the world's total cotton output. In 2019/2020, China's cotton output is about 5 million 930 thousand tons, accounting for about 22.46% of the world's total cotton output. At the same time, judging from the current sugar production in India, it has surpassed Brazil to become the world's first. Although its domestic demand is also huge, export demand is also strong. In the case of India's cotton, sugar and cotton production in Pakistan occupy a more important position in the global market, there will be a "tornado" phenomenon in the market area if there is a slight wind.

Recently, about 400 billion desert locusts appeared in India and Pakistan, causing serious damage to crops in some areas. Therefore, some market participants and some investors expect that if the locust plague continues to the new cotton growing period in Pakistan and India, it will have a significant adverse impact on the cotton yields of the two countries in the new year, and will further produce and supply the global cotton market. Demand relations will have a significant impact and will naturally provide a strong driving force for the global cotton market price.

From the influence of desert locusts on sugarcane in India, locusts are mainly found in Rajasthan in Western China, and sugarcane production in Rajasthan is very small. Therefore, unless the desert locusts extend to the main sugarcane producing areas, they will not cause substantial damage to the production of sugar in India.

Just as the "locust market" was booming, the latest news came as follows: the locust disaster in India suddenly ended. According to Xinhua news agency, New Delhi, February, 17, the locust disaster in India has basically come to an end. Only a small number of locusts still gather in parts of Western Rajasthan. Recently, desert locusts have been devastated in parts of Africa and parts of Asia, causing serious damage in some parts of India, resulting in large crop reduction or harvest. In the hardest hit Rajasthan state, locusts only exist in a small area, and the threat to crops has been greatly weakened, the India Times reported. Dr. Gu Gu Er, head of locust disaster prevention and control group in Rajasthan, said that the current disaster situation in the state is completely controllable except for sporadic areas. The locust disaster in India is mainly concentrated in Rajasthan and Gujarat countries in the west, resulting in large crop reduction or harvest. Rajasthan is the most serious, with a disaster area exceeding 360 thousand hectares. The area affected by Gujarat is more than 1.8 hectares. Crops such as mustard, castor, cumin and wheat are most seriously damaged.

Despite the fact that the locusts are almost over, the India government has issued an early warning that there may be more serious locust plagues in June this year. Kailash Chaudhry, Minister of agriculture and welfare of India, said recently that in June this year, more locust plagues could be seen in the desert areas of Western India. India locust disaster prevention and control department has begun preparations for prevention and control, and plans to use helicopters and drones to locusts.

Behind the locust market is worth exploring.

Wu Faxin, chief strategy officer of Shanghai yarn Bao Technology Co., Ltd. said that the locust market in cotton and sugar market is just a representation. Careful analysis shows that the current cotton market, especially for the cotton growing, production and downstream demand in China in the new year, is still the development and prevention of the new crown pneumonia epidemic. At present, if the downstream cotton market starts in late February, conservatively estimated consumption will be between 600 thousand and 800 thousand tons. If it starts at the end of March, it will reduce the consumption of 800 thousand to 1 million tons. Recently, the market has been relieved by the epidemic, and the use of locusts has come out of a wave of inflation, which has created a good opportunity for the entities to enter into the "guarantee".

"Yesterday, Zheng cotton main contract price limit, I think that is mainly caused by the following reasons: first, the sharp gap of the rat after the opening of the Spring Festival market will need to be filled; the two is that the downstream cotton enterprises in addition to Hubei have been conditionally planning to resume work, and the market is expected to shift from" more pessimistic "to" basically controllable epidemic "; three is the desert locusts. Market funds provide hype themes, agencies play a role, trigger the imagination of following suit; four, there are more OTC funds and less entrance. Therefore, the "disk is very light", the price of pulling up and pressing is very easy, coupled with the attractive follow suit, the market is prone to the phenomenon of "herd effect", or there may be an institution using limited benefits to test the market. "Yes." Wu FA Xin said that there is no significant change in the domestic cotton and cotton yarn market fundamentals. The main downstream consumer markets, such as Jiangsu Nantong and Jiangsu Changzhou, and Guangzhou Zhongda market, have no formal timetable for starting up, and so do Foshan and Zhangcha markets. Many textile enterprises are faced with a series of problems. At the same time, the Sino US market and Zhangcha, Foshan are "pre store and post factory" relations, but nowadays almost no one is seen. Therefore, there is no revival in the downstream, and the abrupt fluctuation of upstream raw material ends has become a "passive water". If the new crown pneumonia epidemic can be quickly controlled, the sequelae caused by the market impact will take a long time to eliminate, and how the future cotton prices will run will depend on the extent of the formal recovery of the downstream market.

Wang Qian, director of market development department of Shanghai international cotton trading center, told reporters that this year, the cotton market is facing a series of "Black Swans" events, and the market sentiment is highly volatile, causing the market to often deviate from the fundamentals and fluctuate greatly. After the Spring Festival, the new crown pneumonia epidemic continued to ferment, the economic operation pressed the "pause button", and the local textile enterprises were slow to work, which made the market extremely worried about the cotton consumption this year. The monthly report on cotton released by the US Department of agriculture in February also downregulated China's cotton consumption by 217 thousand tons. On the first trading day, Zheng cotton price limit fell on the whole line, and then hit a new low in the past 4 years. In the wake of favorable factors such as purchasing and storing capacity and the prospect of epidemic prevention and control gradually improving, market sentiment has improved. Some of the funds have come in to find opportunities, leading to a marked rise in the price of Zheng cotton. Especially yesterday, by the locust disaster, the central bank's interest rate cut and the new cotton cotton intention declined in the new year, Zheng cotton's market reaction was very strong, the main contract price limit, and added a gap after the holiday.

"At present, the market is more likely to reflect the expected response to locust plague. Locusts have no effect on cotton production in India and Pakistan this year, and the impact of the new year's cotton planting is also expected to disappear with the end of locust disaster." Wang Qianjin said,

Returning to the basic supply and demand of cotton market in China, the volume futures warehouse receipts have not yet been found, and the start-up of the demand still takes time, and some of the consumption losses due to stoppage is very difficult to make up for in the short term, and the annual market allergic reaction to the supply side of cotton growing season is normal. Overall, the cotton market still lacks obvious upward driving force.