After experiencing a period of slight fluctuations, Zheng Mian’s market rebounded significantly yesterday, driven by the outbreak of war between Russia and Ukraine. Unfortunately, the good times did not last long. It returned to weakness in the night trading last night and briefly experienced a one-day decline. Parade situation.
At present, the commodity market is performing well under the Russia-Ukraine crisis, especially crude oil and grain and oil. The reason is very simple. Russia is an important crude oil producer and exporter in the world. At the same time, Russia and Ukraine are also important grain producers in the world. Exporting countries, the outbreak of military conflicts between the two countries naturally triggered violent fluctuations in the world’s energy and food markets. The highest price of Brent crude oil futures has exceeded US$100 per barrel, and the prices of soybeans and oils have also continued to reach new highs.
Driven by the surge in crude oil, there was a strong bullish atmosphere in the commodity market yesterday, and the price of Zheng Cotton CF2205 contract once rose to around 21,500 yuan/ton. Just when the market thought that the trend of Zheng Cotton was about to reverse, the trend fell all the way in the night trading, and the weakness was undoubtedly evident. A long bearish holding line directly covered yesterday’s rising positive line. In fact, the commodity market began to correct at the beginning of last night’s trading. The reason was that the Federal Reserve released news that it would return to monetary normalization as soon as possible. This news undoubtedly stimulated the market again.
In addition, the fundamentals of cotton are not satisfactory to the market. The spot price is at a high level and the futures are still at a discount. Although the purchase and sale of lint cotton has improved, the market sentiment is not high. There are no signs of peak production and sales season for orders from downstream textile companies. Especially when cotton prices fluctuate at high levels and wide ranges, textile companies are even more cautious in purchasing, buying as they are used, and trying to control the scale of raw material inventory.
Zheng Mian’s performance yesterday was more like a release of market sentiment when funds faced the turbulent situation in Russia and Ukraine. After the release of sentiment, the market will eventually return to the value itself. The current cotton price is indeed much higher than a year ago, and the price is significantly higher than the value. Once future demand cannot support the cotton price, the price will inevitably return to the value. In the short term, when spot prices are strong, cotton prices maintain wide fluctuations.
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