Cotton Market: Is It A Flash In The Pan?

Affected by the possible landing of Hurricane Marco in the United States yesterday, ice of New York cotton futures rose sharply, reversing the negative situation of the previous day. The main contract in December once exceeded 66 cents / pound, and the settlement price reached 65.82 cents / pound, up 154 points. By this boost, Zheng cotton also showed a "singing" situation, the main cf101 night trading up to 13115 yuan / ton, but a large number of hedging plate on the market to form a certain suppression. Has cotton been in a bad situation? Or is it a flash in the pan caused by fund agitation? Combing the current information, we compare the long and short factors as follows:

Beneficial factors:

1. The panic caused by the epidemic has passed, and the market mostly adjusts the price trend according to the actual supply and demand. Even if the risk rate of the second epidemic situation is faced, there will be no significant panic shock;

2. The domestic epidemic situation has been completely under control, production and living have also entered the right track, and it is expected that domestic demand will boost or demand will rebound. In addition, vaccines in various countries are developing well and are expected to be launched into the market in the next few months, so as to completely dispel people's worries about travel and consumption. At least most of the production and service industries in major economies of the world will be liberalized;

3. The situation between China and the United States is expected to ease after the US election, at least in the short term. No matter who is elected president after the election, economic recovery is the top priority. Without China's cooperation, it is difficult for the United States to achieve rapid economic recovery, and so is China. Therefore, it is likely that Sino US economic and trade cooperation will be strengthened. The second stage trade agreement or the whole trade agreement can be reached;

4. China EU comprehensive investment agreement is expected to be completed this year, which will greatly promote the import and export business of both sides;

5. In the new year, it is expected to receive and reserve;

6. Due to the influence of Sino US trade and epidemic situation, cotton has been hovering at the bottom of history in the past two years, and has reached a new low in history. With these unfavorable factors receding, cotton price is expected to return to normal;

7. Since the beginning of the epidemic, the world's major central banks have released a large number of liquidity funds to the market in varying degrees, a considerable part of which has flowed into the capital market, which has triggered the market's concern about inflation. In the future, whether it is a large number of speculative buying or inflation concerns will form a certain price support for cotton.

Negative factors:

1. According to the global supply and demand balance released by USDA in August, global production and ending inventory will increase in 2020 / 21, with output increasing by 1.3 million bales and global consumption decreasing by 1.2 million bales;

2. The slow recovery of consumption, especially in terms of export orders, failed to arrive as scheduled, which is related to the control of the epidemic situation in Europe and the United States and other major markets. In particular, the anti epidemic situation in the United States is still grim, a large number of enterprises go bankrupt, and the unemployment rate remains high, which suppresses the consumption of non essential textile and clothing goods;

3. With the arrival of autumn and winter in the northern hemisphere, the market is worried that the second wave of epidemic will cause social closure again, thus causing a second blow to the already difficult economic recovery. Although the vaccine research and development is smooth, there is still a lot of way to go before it can fully enter the market;

4. There are too many uncertain factors in the market, especially in the general election year of the United States. At present, the division of American society is intensifying, and many policies for political purposes may damage the already fragile economy;

5. The US stock market, as a barometer of the economy, has rebounded sharply recently and the NASDAQ and standard & Poor's indexes have reached record highs. However, the fundamentals of the US economy are not so good. The economic indicators point to the great recession. How far this bull market seriously deviates from the fundamentals is currently the biggest uncertainty. If the US stock market collapses again It is expected that the global capital market will usher in another earthquake, and cotton, as an industrial attribute, will not be spared.

To sum up, at present, the long and short factors in the market are intertwined, the supply side is relatively sufficient, and the demand recovery at the consumer side is slow. It is doomed that the cotton market is difficult to break away from the turbulence pattern in the short term. However, with the improvement of market confidence, many profits will be realized in the future. The low valuation of cotton price will become the focus of market transactions. At that time, a little bit of fire may start Original.