Short Term Cotton Prices Are Rising Behind The Back Pressure.

Recently, affected by the new crown epidemic and the crude oil price war, Zheng cotton price has gone through a wave of wide shocks. CF2009 contracts rose from 10385 yuan / ton to 11500 yuan / ton today, rising 1200 yuan in 14 trading days. At present, the market pessimism tends to be stable, the phenomenon of bottom hunting is gradually revealed, and the price has rebounded rapidly after hitting 10000 yuan / ton for the two time. However, the reality is still grim.

It is undeniable that the funds in the early stage of the bottom search are not concerned about the recent price movements, they are doing forward transactions. We know that mature funds do not care about the gains and losses of one city or one pool. They value future prospective prices more. The author also believes that as long as the new crown epidemic situation is over, cotton prices will rise again. It is only a matter of time. Unless there is a greater risk of unforeseen risks, such a trader's style may not be suitable for most retail investors, because the necessary conditions such as stress tolerance and warehouse management may not be met. Bull market will also be callback, the bear market will rebound, so grasp the rhythm is very important. Even if you are not sure, it is a small comfort to at least not allow yourself to be in a bad position.

Recent basic news and data also show that cotton prices will continue to repeat, and market participants should be patient and wait for opportunities.

In April 12th, OPEC and its oil production allies reached a historic agreement to cut crude oil production by 9 million 700 thousand barrels per day, the biggest reduction in production in history. In response to this positive news, the market reaction was relatively dull, and the US crude oil futures returned to 24 US dollars / barrel. Though lower than market expectations, at least when oil price falls below 20 US dollars / barrel, it is unbearable for oil producing countries.

Although crude oil has stabilised temporarily, it has limited support for cotton prices. At present, countries around the world have taken measures to freeze the city, and the blockade time continues to lengthen, resulting in a sharp reduction in orders for downstream enterprises. Under the condition of adequate supply and weak demand, the downward pressure on cotton prices remains great. The following data are very good proof.

According to the national cotton market monitoring system, as early as the beginning of April, the average daily use of cotton was about 50.9 days (including the number of imported cotton), an increase of 15.7 days over the same period. Projections of the national cotton industry inventory of about 996 thousand tons, an increase of 28% over the same period.

Raw materials inventories increased year by year, and product inventories also experienced unsalable sales. At the beginning of April, the yarn production and sales rate of sample survey enterprises was 81.1%, a decrease of 0.8 percentage points, a decrease of 24.5 percentage points compared with that of the previous year, and 33.8 days of inventory sales, an increase of 0.9 days compared with the same period, an increase of 13.6 days compared with the same period last year, 17 days higher than the average level of the same period in the past three years.

It can be expected that in the future, the stock of raw materials and products will only increase more, and the pressure on production and operation will be greater. Under such a realistic condition, the risk of rashly rising will enlarge. Sometimes price is the result of compromise between reality and belief. In the volatile market, it may be a better choice to follow the trend.