Last week (June 20-24), the price of Zheng cotton fell sharply and continued to hit new intraday lows. It fell nearly 2,700 points in just one week, and the lowest point once fell below the important support level of Wanqi. The rapid decline intensified the market of panic. Such a sharp downward trend has verified the weak situation of the domestic cotton market.
Last week, Federal Reserve Chairman Jerome Powell told a Senate Banking Committee hearing that the U.S. economy is very strong and can handle tightening well. Although it does not believe that the probability of a recession is high, it admits that a sharp increase in interest rates is “likely” to push the economy into recession, and a soft landing is “very challenging”. Subsequently, the manufacturing data released by the United States and Europe were lower than market expectations, and the United States and Europe started to raise interest rates significantly, causing investors to worry about future economic recession. Commodities represented by crude oil also began a new round of sharp corrections.
Although Zheng Mian’s current correction is closely related to the adjustment of the global financial market, such a large decline is mainly caused by the continued weakness of its own fundamentals. The United States has banned the import of Xinjiang cotton and its products on June 21, which will undoubtedly suppress the demand for cotton textiles. According to the weekly purchase and sales report released by the National Cotton Market Monitoring System, as of June 24, a total of 3.649 million tons of lint cotton had been sold nationwide, a year-on-year decrease of 2.232 million tons, and a decrease of 1.516 million tons from the average of the past four years. Among them, Xinjiang sales were 3.159 million tons, a year-on-year decrease of 3.159 million tons. A decrease of 2.041 million tons, a decrease of 1.194 million tons compared with the average of the past four years.
Last week, Zheng cotton fell sharply and new cotton sales slowed down, causing panic among cotton processing enterprises and traders in Xinjiang. Due to the failure to hedge at high levels in time, cotton enterprises suffered serious losses. They were reluctant to sell and suspended external quotations. The basis spread resources of traders have also decreased. Faced with the falling cotton prices, downstream textile companies still insist on “buying as they are used and replenishing stocks as needed.” At present, there are no obvious signs of recovery of orders at home and abroad. Some yarn mills have significantly lowered their quotations. High-count carded and combed yarns have declined significantly, while OE yarns and low-count ring-spun yarns have decreased slightly. Cotton and cotton yarn prices can Whether the decline can be stopped, downstream consumption will play a key role.
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