At the beginning of the night trading on the 17th, Zheng Cotton suddenly made a downward move, and the main contract price fell to 14,900 yuan/ton. The market originally hoped that Zheng Cotton could touch 16,000 yuan/ton, but accidents always follow the futures market. Is it possible? Is this the end of Zheng Mian’s rebound momentum?
The author believes that Zheng Mian should not be too bearish in the short term. On the 17th, the author analyzed that Zheng Cotton was in the process of rebounding and believed that this rise was completely affected by US cotton. Its own fundamentals were not supportive and the height of the rebound was also limited. Zheng cotton fell sharply on the 18th. Instead, the author believes that we should be cautious about going short and beware of market recurrences. Currently, U.S. cotton is still in a rebound trend. The sharp reduction in production and the increase in market demand have given U.S. cotton bullish support, and this bullish factor is still effective in the short term. Unless the Federal Reserve significantly raises interest rates and the market begins to intensify concerns about an economic recession, U.S. cotton still has upward momentum. In addition, as the delivery time of the CF2209 contract approaches, the futures return is approaching, so we should not be overly bearish based on the market price of 15,300 yuan/ton. In the short term, it is still necessary to prevent the Zheng cotton market from recurring.
Secondly, the divergence between the trend of US cotton and that of Zheng cotton also highlights the great difference in the fundamentals of the two. Judging from the data released now, there are still about 2 million tons of Xinjiang cotton produced last year for sale. Both commercial and industrial inventories are also at high levels. Especially under the premise of sharp fluctuations in Zheng cotton, companies are afraid to purchase in large quantities. Try to maintain the minimum inventory required to ensure normal production. Looking at U.S. cotton, both new season output and ending stocks are at low levels. It is normal for the huge difference in internal and external fundamentals to cause short-term divergences between the two trends.
Now that orders in the cotton spinning industry have just begun to recover, the decline in Zheng cotton is not good news for the industry. This is because futures prices are overdrafting market expectations in advance. Of course, the volume drop on the 18th shows that short funds are entering the market. Does this part of the short position include pre-hedging by Xinjiang ginning enterprises? This possibility is very high. In the long run, domestic cotton supply exceeds demand, and the higher the price, the greater the selling pressure. When the expected purchase price of seed cotton in the new year is far lower than the futures price, early hedging can be well controlled when Zheng cotton rebounds and rises. risk. In short, Zheng cotton will continue to repeat in the short term, and there is not enough time. It is recommended that longs and shorts wait and see for the time being.