When Does The Sino US Trade War And Epidemic Situation Allow Zheng Cotton To Go To The Bottom Of The "Darkest Moment"?

The new crown pneumonia epidemic has spread and escalated in more than 140 countries, and global economic growth is expected to fall sharply. Countries are lowering interest rates to cope with the impact of the epidemic. However, the effect is still not obvious, and financial markets are suffering from blood and rain. The cotton that has not yet recovered from the cold winter has become one of the worst hit species. In less than a week, Zheng cotton main contract 2005 tumbled more than 1000 points, creating a new low of nearly four years.

After the trade, the vitality has not yet been restored, and the epidemic brings salt to the wound of Zheng cotton.

The impact of Sino US trade war on zhengmian disk began in June 2018. In the next year and a half, the market repeatedly pointed out that domestic textile exports were shrinking and cotton demand was cut down. Zheng cotton fell all the way, and the 01 contract fell below the 9 level at the end of last year. Until the agreement reached in the first stage of Sino US economic and trade agreement, the market atmosphere really began to improve. Originally thought that Zheng cotton can start this year to underestimate the repair market, but unexpectedly killed the new crown pneumonia epidemic "black swan", this time is still from the consumer side of the price caused by drag.

Under the epidemic situation, the global economic worries are becoming more and more intense. Because of the relatively large consumption elasticity of cotton, the economic impact is even more acute. Domestic textile enterprises delayed construction after the Spring Festival, delayed orders, and textile and garment exports had dropped sharply. According to customs data, textile exports in China decreased by 19.9% compared with 1-2 in 2020, and garment exports dropped by 20%. At present, the epidemic situation in China has been controlled, but the overseas epidemic is still fermented. It is estimated that the export rate of domestic textile and clothing will lose in a certain period of time. In 2019, China's total exports to Italy, Korea, Japan, France, Germany and the United States amounted to 76 billion 600 million US dollars, accounting for 55% of the total export volume of Chinese clothing. The epidemic situation in these countries showed an accelerating trend in recent years.

Zheng cotton stumbled and broke the cost line. How deep can the pit go?

The average processing cost of machine picked cotton in Xinjiang is near 12000 to 13000 yuan / ton this year. Under normal circumstances, many investors believe that the price of zhengmian will be at the bottom of the second tier. But it should be noted that the short-term price is determined by supply and demand, and the long-term price is determined by the cost. Cost is the intrinsic value of contract varieties. In the case of short-term risk, the bottom of the disk price is harder to measure with cost. Looking back on the first quarter of 2016, Zheng cotton's main contract fell to 10000 below, and the spot price at the same time was around 12000. This is only the futures market is expected to be worse, and the futures discount rate is too large.

Although the cost line is not too much reference for the bottom of the short-term disk price, the cost line will still play a supporting role. At the same time, the national cotton store increased the volume of incoming rounds. This week, the maximum price was 12901 yuan / ton, and the average price was 12900 yuan / ton on Monday. In view of the current situation this year, the negative emotions brought by the epidemic are still continuing. The global market is in a mess. Domestic cotton stocks are high and demand prospects are not good. Zheng cotton is difficult to reverse the situation in the short term, but it is not too pessimistic for speculation on the bottom space.

After the risk of global pandemic is released, Zheng cotton will return to supply and demand game. After the global economy has been hit hard, the demand side will also focus on the speed and extent of order recovery in the lower reaches of the country, and import and export tariffs should also be paid attention to. The supply side will provide greater opportunities for Zheng cotton. USDA predicts that the global cotton planting area will be reduced by 4% over the same period in the new year. The cotton planting area in Xinjiang and other places in China will also decline compared with the previous year. In addition, there are potential hype during the sowing period, such as weather and locusts, which will probably become an important factor to promote the price fluctuation of Zhengzhou cotton.