Market Analysis: Behind The Fall Of US Cotton Zheng Cotton This Week

 

The decline of cotton in the United States is closely related to the overall financial environment of the United States. On May 5, the U.S. stock market experienced a "bloody" night, and the three major indexes collectively opened low. At the end of the day, the Dow fell 1063 points, or 3.12%. The last time the Dow fell more than 1000 points was nearly two years ago.

The recent U.S. employment, economic, financial and other policies or data are worrying, leading to the stock index crash. In particular, US Federal Reserve Chairman Colin Powell said on Wednesday that the 75 basis point interest rate increase was not worth considering, but the US interest rate futures price on Thursday showed that the possibility of the Federal Reserve to increase interest rate by 75 basis points in June was 75%, which directly led to extreme pessimism in the market and the decline limit of US cotton ice.

Therefore, the central indicator of the Fed's policy and the market's impact remains. This indicator is the largest grey rhinoceros in the market. It is still too early to predict a recession or economic crisis. After all, the Federal Reserve wants the US economy to achieve a soft landing.

The rise of Zheng cotton in China shows a weak state. On the one hand, it is the rising futures price, on the other hand, it is a textile enterprise that is constantly reducing production. There is a serious contradiction between the fundamentals. Under the pressure of contradictions, Zheng cotton can still break through the previous high, completely related to the trend of American cotton. Good demand for cotton in the United States and abundant orders from foreign textile industry supported cotton prices.

On the contrary, domestic textile and clothing orders are constantly losing overseas. Due to the epidemic control, the number of domestic orders is also very limited, and the enterprise's startup rate remains low. In addition, with the high cotton price, the enterprise's production is at a loss, and its production enthusiasm is not high. The contradiction between reduced demand and high cotton prices continues to intensify.

The actual cotton spot price support is very strong, and cotton is also a seasonal crop. It is not realistic to go down the road immediately after the interest rate increase starts. The bull bear trend of the cotton market needs time coordination, and more needs the coordination of macroeconomic environment and fundamentals.