Recently, driven by the rebound in crude oil, the commodity market has picked up. The main contract price of Zheng cotton has gradually reached the important mark of 20,000 yuan/ton. The unfavorable fundamentals of the cotton market seem to have weakened the impact on the futures market.
Sometimes the market is so elusive, rising and falling, just like the weather. This continuous rebound of Zheng Cotton has surprised the author, because now the fundamental news is not conducive to the price rebound. For example, the entire cotton spinning industry chain now has a large inventory, and all links are destocking. Enterprises are less enthusiastic about starting production, and their purchasing motivation is obviously insufficient. Some companies that the author is familiar with have had stable production and operations in the past. This year, the yarn inventory is large, basically maintained at two months, which has seriously affected the company’s cash flow. In order to reduce the inventory, it is planned to start the holiday at the end of December and not start work until after the Spring Festival.
As far as the author knows, this company has never had a holiday for such a long time. In previous years, when the market was at its worst, it would only take about half a month. Faced with the pressure of unsalable products and raw material inventory, coupled with the high prices of raw materials and products, which occupy a large amount of funds, companies have no choice but to consider arranging holidays in advance.
The sales progress of upstream raw materials is also significantly slower than that of the same period last year. Companies are holding on to cotton prices. Facing the pressure of a weak cotton market, they look forward to good price performance next year. At this stage, both upstream and downstream enterprises are in trouble. According to such fundamentals, it is difficult for Zheng cotton prices to rise without the support of themes. The result is that when the market news has been unfavorable to the price, the futures market has rebounded continuously. Although the intensity is not large, it has risen by more than 1,000 points from the previous low price. Maybe this is the charm of futures, they always change unexpectedly.
I can’t say what I think about the future. The spot price has almost returned. To continue to rise, the market needs to be subject to speculation. In the short term, as the Double Festival approaches, it is expected that it will be difficult to achieve anything. The market will still mainly fluctuate in a wide range.
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