2020 is an eventful year. The cotton market has just experienced the baptism of Sino-US trade friction. Unexpectedly, it encountered the new coronavirus epidemic on the eve of the Spring Festival. This epidemic struck suddenly and brought a huge impact to the global economy.
Different from the Sino-US trade friction, the adverse effects brought by the Sino-US trade friction can be gradually digested through price reductions, etc. However, the impact of the epidemic will forcibly block the consumption of goods at a certain stage. . Before the Spring Festival, with the conclusion of the first phase negotiation agreement between China and the United States, the import and export markets of the two countries have seen the light of day, and the economy is expected to bottom out. However, the sudden outbreak of the new coronavirus pneumonia epidemic has significantly reduced or even stagnated the flow of people, and large-scale business shutdowns, With people quarantined and reduced going out, cotton downstream textile consumption will face a fatal blow in the short term, and the originally good upward trend will be reversed in an instant.
At present, the domestic epidemic situation is basically under control, but the epidemic situation in some foreign countries is still severe. As time goes by, the impact of the epidemic on market mentality should have passed the worst period, but the cotton market is still affected by the slow economic recovery after the epidemic. Let’s call this the “post-epidemic period” of the cotton market. The price of Zheng cotton has gone from the lowest level at the end of March to the beginning of April. It has gone through a wave of upward trend that has continued to rise from the bottom. During this period, it has experienced changes in Sino-US relations and the impact of domestic industrial policies. It has now entered a relatively stable stage, and the subsequent market is still It deserves continued attention from the cotton industry. How the market will evolve will still have a huge impact on the cotton-related industry and cotton market investment.
First of all, cotton supply has entered the inventory consumption stage. After the Spring Festival, cotton processing has basically ended, and all cotton has been transferred to factories, warehouses, and distributors. The latest data shows that as of the end of June, the national cotton commercial inventory was 3.2389 million tons, a decrease of 534,900 tons from the previous month, which includes cotton stocks in Xinjiang, mainland and bonded zone warehouses; industrial stocks were 658,300 tons, a year-on-year decrease of 36,600 tons, and a month-on-month decrease of 2.12 Ten thousand. From the perspective of industrial inventories, textile companies’ stockings have declined both year-on-year and month-on-month, indicating that companies are less willing to stock up, are underconsumption, and are bearish on the market outlook. However, to a certain extent, if textile companies currently stock too little stock, There are risks too. In terms of commercial inventory, consumption in the last two months has been significantly accelerated compared to March and April, reflecting a rebound in consumption. In a normal year, this inventory is not actually large, and can even be said to be a bit tight, but Since the epidemic has affected downstream consumption, recovery requires a process, and currently there is an oversupply situation.
Speaking of the central reserve cotton, the author also wants to share his views on this. This year’s reserve cotton rotation policy is later than in previous years, but the market generally believes that it may not be rotated out this year. , the central reserve cotton rotation policy was introduced in July, and the circuit breaker mechanism of 11,500 yuan/ton mentioned in the announcement undoubtedly brought some psychological support to the market, especially the current cotton supply and demand situation may make the market regard the current position as a phase. bottom. Although the author believes that the rise and fall of prices essentially depends on the balance of total supply and demand, but since the current pressure of oversupply may not be too great, 11,500 yuan/ton may become an important support point, and conversely 11,500 yuan/ton It doesn’t necessarily mean that it cannot be broken.
Before new cotton comes on the market, the focus of the market should be the changes in downstream consumption. If downstream consumption is strong, inventory consumption will be fast, and the market will inevitably rise steadily. If downstream consumption is poor, inventory consumption will be slow, and the market will be difficult to maintain an increase or Hovering low. Through a survey of textile enterprises this month, we learned that the overall situation of textile consumption in July was slightly worse than that in June, but the situation of textile enterprises with different sizes and products was different. At present, domestic consumption is relatively better than abroad, and domestic sales are stronger than exports. Capital’s focus on the epidemic has become a relative “past tense”, and the worst situation in cotton futures prices has passed. It is expected that in the absence of unexpected bad consumption, cotton stocks will be steadily depleted before the new cotton is launched, and futures prices will still maintain a slow rise at the bottom.
In addition, for the current relatively stable market, we cannot ignore unexpected factors. For example, will the development of Sino-US relations have an adverse impact on textile trade again? How will the epidemic develop further? The impact of the epidemic may not only be detrimental to consumption, but may also be detrimental to supply. For example, the recent epidemic in Xinjiang deserves attention. Any emergency event must be based on the substantial impact on both supply and demand as a basis for market judgment.
To sum up, based on the above basic analysis of the market, the author believes that the market may be stable and have a high probability of improvement. It is recommended that the cotton-related industry and investors can view the current market trend rationally and still maintain the sensitivity that the market may change suddenly over time. After all, opportunities always come to those who are prepared. It is recommended that companies that have no or out-of-stock products should be aware of and prepared to avoid the risk that the market may suddenly rise. As the saying goes, if you are looking for market trends, you are allowed to use futures, and if you are looking for market trends, you are not allowed to use options. Buying futures at low prices and buying call options should be based on Make your own choice based on your own situation. If you try to operate after the market trend occurs, you will often miss the opportunity.
In addition, companies with large holdings should not ignore risks. Even if the market rises, whether the losses can be recovered is still a question mark. If unexpected negative factors appear again, it will be even worse. Technical analysis of the market can be carried out Choose a relatively high level to partially short the hedge, or choose options.��Hedging operations in advance, the choice of strategy combines the time period and volatility to determine whether to buy or sell. In short, in the current era of frequent uncertain events, risk control is the first priority for spot companies, and speculators must be patient if they want to make a big move. Short-term band operations are more stable, and long-term operations are more stable at the current price. Buying on dips seems to have a better chance of winning. </p
