Since May 2005, cotton futures prices in NYBOT and CZCE markets have entered a relatively small equilibrium region, namely, 46-60 cents/bushel in NYBOT and 13000- 16000 yuan/ton in CZCE, and have been maintained for nearly three years. Fundamentally speaking, the maintenance of this region is caused by the synchronous growth of cotton production and demand. Recently, after the market price approached the bottom of this equilibrium area again and gained support, it launched a wave of rapid rebound, and cotton prices went up all the way, but the current futures price still failed to break through the watershed of the medium and long-term trend. Whether the bottom of the market can be effectively penetrated and whether the bottom can be built in the medium and long term has once again become the focus of market discussion. The author expresses his own views on this: First, the internal reasons for the formation of the market price equilibrium zone. Since 2004, the world has had a bumper harvest of cotton. In 2004/2005, China, the United States and India increased their output by 6,543,800 tons, 6,543,800 tons and 6,543,800 tons respectively, with output growth rates of 29% and 29% respectively. As a result, the global cotton ending inventory has greatly increased (from 930 10000 tons in 2003/2004 to 12053000 tons in 2004/2005). Coupled with the outbreak of textile trade disputes, consumer demand fell sharply, leading to a serious imbalance between supply and demand of cotton, and the global cotton market came out of a three-year bear market. After 2005, with the cancellation of textile quota, the textile industry, represented by China, went out of the trough, and the cotton market basically showed a pattern of booming production and demand. The decline in prices and the increase in consumption have promoted the steady growth of cotton demand, thus making the cotton price reach the basic balance between supply and demand of more than 46 cents/bushel. Qualitative speaking, the synchronous growth of supply and demand is the fundamental reason for the market to maintain balance. Enter the salon and ask the futures experts >>& gt Second, the necessary conditions to break this equilibrium zone. The necessary condition for cotton prices to break the equilibrium zone in the past three years is a substantial increase in supply or a substantial decline in demand. Now let's analyze these two factors separately: 1. On the supply side, the US Department of Agriculture's supply and demand report in May this year predicted that the US cotton output would reach 4.09 million tons in 2007/2008, a year-on-year decrease of13%; The ending inventory of American cotton is estimated to be 654.38+390,000 tons, almost half of that in 2006/2007. The forecast of cotton yield in the United States in this report is based on the fact that the planting area will reach 735 1 0,000 mu, the lowest level since 1989, and the yield per mu will reach 6 1.2 kg. The prediction of yield per mu is based on normal meteorological conditions. However, at present, the soil moisture in the southwest of the United States is ideal, and future weather conditions, export trade factors and policy changes may lead to great changes in the forecast results. Even so, we can't blindly deny the scientific nature of its prediction. For this report, the market thinks that the record huge ending inventory data in 2006/2007 will make the price unbearable in the short to medium term. However, some analysts are optimistic about domestic and international demand in the United States. Due to the increase in foreign demand, it is estimated that the export volume of American cotton will reach 38 1 1,000 tons, up nearly 1/3 year-on-year. Looking back at the Outlook Forum in March, USDA boldly predicted that American cotton will become the protagonist of China's cotton import market in the second half of this year, and the proportion of American cotton in global cotton trade is expected to return to about 40%. In China, this report once again increased China's cotton production by 22,000 tons, reaching 6.75 million tons. As the third largest cotton producer in the world, India's cotton output in 2006/2007 is equivalent to that of the United States, and it is expected to reach a high output of 4.68 million tons. Therefore, the global cotton output may be higher than the output calculated by the price trend, but the above doubts seem to have been digested by the market. 2. Cotton demand: Since 2005, the global cotton demand has grown at an average annual rate of 6.8%, and the growth rate is still unabated. Although the market thought that the impetus of global economic growth might be weakened and the outbreak of textile trade disputes would affect the demand of cotton market, the weakening of the impetus of global economic development has not been proved by facts, and it may be just an adjustment. The impact of textile trade disputes between China and the United States and China and Europe on China's textile industry has come to an end. At the same time, according to the terms of the agreement reached between China and Europe in 2005, the EU will fully liberalize China's textiles from 2008, which will keep its demand for cotton at a stable level. China is the main power source of global cotton demand growth. From the global distribution of cotton consumption, it can be found that the cotton consumption demand of developed countries in Europe and America has remained basically stable in recent years, but the cotton consumption demand of developing countries led by China and India has increased rapidly. China has outstanding advantages in textile industry chain, and its product cost performance is ahead of other countries 10%. Since China reached a textile trade agreement with Europe and the United States, the textile export environment has become more stable, which will continue to support the increase in the demand of cotton processing industry. In recent years, the cotton consumption demand in China has maintained an annual growth rate of about 12%. Third, it is unlikely that cotton prices will break through the equilibrium zone. If the cotton price is blocked, what is the motivation to test the lower limit of the equilibrium zone? Will the price fall below the current platform? Personally, I think this is unlikely for the following reasons: 1. Although the inventory of NYBOT cotton in new york has increased steadily in recent weeks, the price has decreased.