On February 22, Zheng cotton opened higher and moved higher, with the main contract hitting a high of 16,500 yuan/ton. The market was once again driven by the rising atmosphere. All parties discussed the follow-up trend. As futures prices entered the high range, industry players were concerned about risks. There are different opinions on how to operate and how to operate, and the differences are gradually increasing.
First of all, prices have risen rapidly recently. On the one hand, it is due to the improvement of the macro market atmosphere, the rebound in expectations for U.S. economic stimulus, China’s 14th Five-Year New Deal will be introduced one after another, and the market is full of expectations for the domestic and foreign commodity economy; on the other hand, the U.S. Department of Agriculture Cotton demand in China and some countries continues to increase, and global cotton inventories continue to decline. At the same time, there is room for domestic cotton consumption to continue to rebound. However, some industry players believe that although spot prices continue to rise with futures prices, the volume of transactions is still not large, and it is difficult to judge whether it is “inflated”.
Secondly, the main force of futures has rebounded to more than 16,000 yuan/ton, which is already in the mid-to-high range of Zheng cotton’s long-term price. Against the background of the current global epidemic, the value has basically been restored. However, some investors believe that the U.S. cotton inventory-to-consumption ratio has dropped to a low level, and the external market has strong upward momentum. Zheng cotton is expected to continue to follow the rise. Futures, as a price discovery tool, combined with the promotion of some investment funds, may overdraw the upper space in advance.
Furthermore, the prices of many textile raw materials such as polyester staple fiber, nylon, and spandex have increased recently, which has contributed to the rise in cotton prices. With the textile market booming, it seems reasonable to support Zheng Cotton’s rise. However, whether the cotton price surge can be digested by the physical market is the key to whether it can maintain its high position. Therefore, no matter what the attitudes of all parties are, it is most important not to forget to prevent and control risks when making profits. </p
