Expert Analysis Of Cotton Market Trend: Locust Speculation End Cotton Does Not Have The Basis For Soaring

Yesterday, with the help of locusts, most of the agricultural products were on the rise, with cotton showing fierce competition and closing. What are the main factors that affect cotton prices in the future? To this end, China cotton net reporter interviewed the Hongyuan futures analyst Xiao Fengbo on the current cotton market trend.

Reporter: what do you think is the main driving force for the recent rise of Zheng cotton?

Xiao Fengbo: Cotton futures fell sharply in early February, which is caused by the new crown pneumonia virus epidemic. With the country's strict prevention of the epidemic, new cases gradually reduced, and cotton panic fell quickly, and began to repair the rising market. Subsequently, due to locust disasters in India and Pakistan, it will cause great damage to crops, India cotton futures will rise sharply, and domestic cotton futures will also be closed.

Reporter: outside the speculation locust disaster, do you think locust disaster has an impact on domestic cotton production?

Xiao Fengbo: Although locust disaster has caused great damage to agriculture in parts of East Africa, India and Pakistan, it has a very limited impact on cotton production in China.

First of all, it is almost impossible for India's locusts to leap over Himalaya Range. The high mountains and cold weather will be enough to stop locusts. Even if the locust troops are moving eastward to Bangladesh and Burma and then to China, this possibility is very small. Moreover, the locust disaster in India is basically controlled. In the worst hit Rajasthan state, locusts are only found in a small piece. The threat to crops has been greatly reduced.

Secondly, the main cotton producing areas in Xinjiang, although the Spring Festival and summer temperatures are relatively high, but dry, locusts are difficult to survive, so many years have not yet seen locusts and insects. Moreover, there is a lesson from India. This year cotton pest control will be more early prevention, so the impact on China's cotton production is very limited.

Interviewer: do you think that the rise of cotton is a trend or a trend? Why?

Xiao Fengbo: The rise of cotton is a rebound. From the domestic point of view, the downstream enterprises of cotton have been started, weak demand, more domestic stocks, no shortage of cotton; from the international market, the global cotton supply balance, the end of the stock is higher, there is no foundation for the rising trend.

Reporter: what do you think is the main reason for the rise in cotton prices? Will the cotton price rise suddenly after the end of the epidemic?

Xiao Fengbo: Since the Sino US trade friction, cotton prices have been falling all the way, and the most important factor is the weakening demand. In recent three years, the supply of cotton is basically stable, but demand is weakening. China's textile exports and domestic clothing retail sales have declined slightly, forcing cotton prices to rise. Another is that the production capacity of chemical fiber continues to expand, and the price of crude oil is very low, and the competitiveness of cotton spinning is decreasing. Only a reduction in supply in the future can support a sharp rise in cotton prices.

From the current situation, the epidemic prevention and control situation continues to improve, cotton textile enterprises next week will gradually increase the operating rate, the end of February and early March will usher in a greater return to work. As cotton downstream enterprises have started construction, procurement activities are active, and cotton demand has been strengthened. But it will not usher in an explosive rise. Due to the balance of global cotton supply and demand, domestic cotton supply is adequate and there is no basis for a substantial increase.

Reporter: what do you think of cotton prices in the future? What factors do you need to pay attention to?

Xiao Fengbo: The trend of cotton in the future is rising at the bottom of the price and gradually rising intermittently. It is worth looking forward to the price recovery before the Spring Festival. Because there are still some uncertainties in Sino US trade, it is more difficult to raise prices to 15000 yuan / ton this year. At present, we need to pay attention to the global cotton planting area. According to the NCC survey, in 2020, the intentional planting area of us upland cotton was 12 million 800 thousand acres, which decreased by 5.6% compared with the same period last year. This is a positive new number, which concerns whether the cotton planting area in India will decrease compared with the same period last year. After all, cotton prices are not dropping much lower than the same period last year. If global cotton planting area decreases and supply decreases, cotton prices will continue to rise in the future.