In recent trading days, the price of Zheng Cotton CF2205 contract has continued to consolidate at 21,000-21,500 yuan/ton. The long and short sides have been fiercely competing, and the market has a strong bearish and short-chasing sentiment. Some institutions and cotton-related companies predict that once the short-term main force will break through the strong pressure level of 21,000 yuan/ton, the downward space will be further opened. The reasons can be simply summarized as follows: the Federal Reserve will raise interest rates as soon as March, global cotton planting intentions will increase significantly in 2022, and the orders received by cotton spinning mills, weaving and clothing companies after the Spring Festival are lower than expected.
However, the author believes that the main force of Zheng cotton is expected to bottom out and rebound near the key point of 21,000 yuan/ton. The shock range of 21,000-22,000 yuan/ton is still valid. Traders and speculators need to be cautious when chasing short positions. The main points are summarized as follows: First, the tension on the Russia-Ukraine border has been initially eased, paving the way for diplomatic consultations between all parties. Russia announced the withdrawal of troops from the Russian-Ukrainian border and U.S. President Biden and Russian President Putin agreed in principle to hold a summit to discuss the security situation in Europe. The possibility of a conflict between Russia and Ukraine has dropped significantly, and crude oil and other commodity futures have fallen in response; second, in 2022 In the first half of the year, the central bank’s monetary policy turned to be prudent and loose, which was beneficial to the cotton textile and clothing industries in reducing financing costs and improving product competitiveness. The next step in the “China’s Monetary Policy Implementation Report for the Fourth Quarter of 2021” released by the People’s Bank of China shows that prudent monetary policy must be flexible and appropriate, increase cross-cyclical adjustments, give full play to the dual functions of the total volume and structure of monetary policy tools, and focus on Make full efforts, make precise efforts, and make efforts in advance; thirdly, the high cost of lint in 2021/22 and the land contract fees and physical and chemical costs of cotton planting in 2022 have all increased significantly, which will support the high operation of cotton prices this year. Judging from the survey, as various financial institutions generally adopt measures such as adjusting loan repayment periods and delaying loan repayments, and cotton companies timely sell some batches of lint, cotton by-products, etc., cotton processing companies have shown strong resilience and resilience.
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