Rumour Has Been Heard That Cotton Prices Will Rise Or Open.

Since the beginning of this year, domestic and foreign cotton prices have been falling steadily. Although domestic cotton prices have rebounded after breaking through the 10000 yuan / ton mark, cotton prices have gone up and been uneven, and have been in a state of repeated shocks. Yesterday, rumors about cotton storage and purchase went silent in the industry. If a stone fell into a quiet water surface, a ripple spread and stirred up stagnant water. After that, more China plans to import American cotton rumors that domestic and foreign cotton prices once entered a state of excitement.

A pile of money failed to pull up cotton prices. The two round of locust plague failed to stir up cotton prices, and countless times to support the downstream production failed to stimulate cotton prices. When everyone was trying to figure out no way to increase cotton prices, an increase in storage and two purchases of cotton in the United States raised the banner of cotton violence. According to long Zhong monitoring data, on the 22 day of April 2020, the US cotton main trading ended up 2.76 cents / pound to 56.07 cents / pound, up 5.18%. By 10:38 April 23rd, the latest price of zhengmian main unit was 11725 yuan / ton, up 620 yuan / ton, or up to 5.58% (see chart 1).

The specific contents of the market rumors are two points: first, the relevant agencies discussed the increase of some agricultural products purchase and storage plan. The initial increase plan involves soybean, corn, cotton, sugar and soybean oil; second, a large enterprise in the textile industry has begun to make an inquiry to the us to purchase cotton. Although there are many conjecture about the possibility of cotton supply and demand improvement in the early stage, especially for cotton storage and purchase and increase of US cotton imports, no matter whether it is seeking truth from the top or the periphery, it has no end, and this exact content has increased its possibility and authenticity, so it can cause market participants to pay attention to and respond to it. Moreover, the global epidemic has intensified and the inflection point has not yet appeared. The global economy has been seriously hit, and market confidence is badly needed to rebuild and maintain. If the rumor is true, it will undoubtedly pour a strong stimulant into the cotton market.

Long Zhong believes that although the news is still in a state of hearsay, it has not been confirmed or rumored by relevant departments and related enterprises, but there is no wind and no waves. And weak market cotton needs to be good to break the negative market atmosphere. Besides, these messages also have basic support.

First of all, the inventory level of China's cotton reserves is low, and it has full storage space. According to long Zhong data monitoring, as of the end of March 2020, China's cotton stock was 1 million 862 thousand tons, the stock level was the same as that in 2008, and the difference between the national stock and the stock peak was more than 9 million tons (see chart 2).

Secondly, the current timing of collecting and storing cotton and importing cotton is appropriate. The low price of cotton at home and abroad is conducive to the purchase, storage and import of cotton for the country, industry and enterprises. Since the beginning of this year, domestic and foreign cotton prices have continued to decline, all falling to the lowest level in nearly ten years. At this time, the purchase and storage of the country not only reduced the cost of purchasing and storage, but also played a role in stabilizing the cotton market. With the passage of time, the devastating force of the outbreak as a result of emergencies and force majeure on the global economy will gradually recover, and cotton demand will resume growth.

Finally, from the perspective of the current cotton demand, it is insufficient to rely solely on the market itself, and we need to rely on external forces to improve the state of imbalance between supply and demand. At present, cotton traders and logistics enterprises all reflect the decrease of cotton trading volume and market activity. Compared with the previous years, the global textile enterprises are basically facing the problem of high operating pressure and insufficient orders, which limits the purchasing demand ability of medium and short term cotton. At this time, the national reserve as a demand buffer will effectively improve the cotton spot market trading status.

Although the rumours of purchase and storage and import of cotton have a stimulating effect on cotton prices, they still need to be determined and implemented. The short-term market participants need to be cautious in entering the market. From the market to the impact, demand is still the main factor, but not the pseudo demand. If the news is implemented, cotton prices will rise further. The main force of zhengmian is expected to strike and break through the resistance of 12000 yuan / ton, and vice versa. Short term cotton spot prices still need to rely on cotton futures.