Commodities surged on the 25th, with cotton breaking through a high of 17,000 yuan/ton. Since last year, cotton has been on the road to breaking new highs and shows no signs of stopping. Looking at the current market, the bullish atmosphere is extremely strong. Is it a short-term bull feast or a sign of the start of the future bull market?
Industry professionals believe that cotton rose from around 10,000 yuan/ton last year to a high of 17,000 yuan/ton in less than a year in a short period of time. The sharp rise is really rare. As the epidemic continues to spread, the world’s mood is extremely pessimistic. In order to save the precarious world economy, global central banks have launched an unprecedented round of large-scale water releases, which ultimately led to a sharp change in the market. This is the main reason why commodities, including cotton, started a bull market.
The current cotton price has exceeded 17,000 yuan/ton. Everyone is very concerned about how the market will develop in the future. An analyst told the author that the huge increase in cotton on the 25th was completely unexpected, and of course it was related to the dovish message released by the Federal Reserve last night. Federal Reserve Chairman Powell said at two consecutive days of hearings of the House Financial Services Committee that the U.S. economic recovery is far from being realized and there is still a high degree of uncertainty in the future. He promised that the Fed will maintain interest rates near zero to achieve the goal of moderately exceeding 2% inflation for a period of time. He also stated that it will maintain the current pace of Treasury and mortgage-backed bond purchases until subsequent progress substantially reaches the Fed’s policy goals. This speech means that it is unlikely that monetary policy will be tightened for a long period of time. In the future, as the global economy recovers and cotton consumption increases, the resonance between the two is likely to further stimulate cotton price increases.
Of course, some people believe that cotton prices have risen to a new high in the past three years, and it will not be easy to continue to break through. The expected inflation only exists in people’s minds and has not become a reality. Everything is possible but not necessarily It’s all bound to happen. The current cotton price is much higher than before the epidemic. Whether it can continue to rise sharply in the future requires attention to other fundamental news.
At this stage, cotton prices are rising higher and higher, which means that the risks are getting bigger and bigger. When encountering resistance levels, shock adjustments will inevitably occur. So after the adjustment, whether it will rise or fall, you need to pay attention The actual operation of the market, at least from now on, is that the increase is greater than the decrease. The author believes that whether in a bull market or a bear market, if risk control is not done well, the probability of loss will be very high. </p
