The Logic Behind Zheng Cotton'S Weird Performance

"The disk is sometimes a naughty child, sometimes quiet and sometimes crazy, we always expect him to be steady, but it is always more unexpected than imagined." today Zheng cotton's performance perfectly illustrates this point. This wave is so abnormal. What is the logic behind it? It must be the answer most people want to know. The author here is the only way to provide reference for reference.

Last Friday night, Zheng cotton had a deep callback. The CF2001 contract fell below the 12000 yuan / tonne mark, and the news of this fall is that the market will release the possible change in Sino US economic and trade relations. According to market rumors, the office of the United States trade representative issued a notice, decided to start in June 4th, for the fifth batch of exclusions to extend the validity period of the product list (34 billion tariff exclude list products) more than 80% of the products to recover 25% duty. Zheng cotton, who hoped to continue to fall today, walked out of a small line, which surprised the market.

Last weekend, there were also reports of locusts invasion. According to CCTV finance and micro-blog news, locust attacks were attacked in Punjab and Sindh provinces of Pakistan. Locusts everywhere were basically gnawed by crops and had great influence on cotton, sugarcane and rice growing well. Locusts were the continuation of locusts in Africa, Arabia Peninsula and South Asia in 2019. This is the most serious locust disaster in decades, which has a large impact on local crops. The United Nations Food and Agriculture Organization estimates that the loss to crops in summer is about 2 billion 890 million dollars. From the disk, sugar, cotton and other agricultural products did appear to rebound to varying degrees.

The author thinks that at this stage, it still belongs to the weather rising period. The cotton price is hard to fall deeply, and the characteristics of strong support at the bottom have not changed. Under the influence of no black swan event during the growth period, the probability of cotton price rise is greater than the fall probability. In addition, the limited spot stock of cotton enterprises can only be purchased from futures prices, which is also conducive to the formation of cotton prices.

China's economic activities are basically on the right track, and the domestic consumer market has gradually resumed, and the enterprise orders have shifted from foreign trade to domestic demand. In May 31st, the National Bureau of Statistics Service Industry Survey Center and the China Federation of logistics and purchasing released the China Purchasing Managers Index. The composite PMI output index was 53.4%, unchanged from last month. The main raw material purchase price index and ex factory price index were 51.6% and 48.7% respectively, up 9.1 percentage points and 6.5 percentage points from last month, all of which are the highest in the past 4 months. The main raw material purchase price index has risen to more than the critical point, and the purchasing price of raw materials has risen. Therefore, from the macro data level, cotton prices do not have the foundation of deep down.

In contrast, the number of confirmed cases of the global epidemic has continued to grow, and the risk has not disappeared. Russia, Brazil and other countries are growing rapidly, and the European countries tend to be stable. They are being orderly resumed and resumed production. After several months, the epidemic impact has been fully reacted and released on the disk. Under the condition that the vaccine has not yet appeared, Global trade is expected to remain low, and this normal will remain for a longer period, which will put pressure on the rise in cotton prices. In particular, the United States has been bogged down in the quagmire of epidemic and riots, and its economy has been greatly affected. Despite the announcement of the resumption of economic activities, it will take a long time to recover, and the economic reopening and epidemic will continue to be the main contradiction.