For bears, this week is a big profit week; For bulls, this is the most collapsed week.

On Friday, cotton prices at home and abroad resonated, and the market sentiment was pessimistic. Zheng Mian's main force once approached the daily limit in early trading, and the far-month contract touched the daily limit. As of the close of the afternoon, cotton fell by more than 6%. Both cotton and cotton yarn futures showed an accelerated downward trend.

International cotton prices plummeted.

What caused the sharp drop in cotton prices at home and abroad?

"From an annual perspective, it is expected that the global cotton output will increase or decrease in 2022/2023, and the supply and demand will be looser than that of the previous year, and high-priced cotton will have downward momentum; From the perspective of marginal demand, the demand for clothing in the United States has shown signs of peaking. In May, the export of textiles and clothing in Southeast Asia declined significantly, and the compression of spinning profits reduced the operating rate of foreign textile enterprises, which also put pressure on cotton prices. " Wu Jingwen, cotton analyst of CITIC Futures, said.

It is worth noting that the net number of speculative long orders in ICE cotton futures decreased for the sixth consecutive week.

Wu Jingwen believed that the international cotton price was pushed up by the air, and the main contract rose from 120 cents/pound to 155 cents/pound. With the digestion of the bullish news in the early stage, the macro level turned empty, the demand growth was weak, and the high price was suppressed by downstream consumption. The net long position of ice cotton continued to fall, and high-priced cotton faced strong downward pressure.

Weak supply and demand dragged down cotton prices.

"In the overall macro-downward environment, the cost support failed, the cotton price fell to the actual demand, and the whole industry lacked the lubrication of traders. The contradiction lies in the high cost of the ginning factory and the weak downstream demand. " Wu Jingwen said.

In fact, the current logic is that due to the acceleration of inflation, the macro rhythm of the Fed's interest rate hike has undergone tremendous changes, and the original moderate interest rate hike expectation has been broken. The rapid interest rate hike has intensified the suppression of demand and the market has panicked. The whole trading atmosphere has changed because of the macro turning point.

"The current trading logic has become a contradiction between the recovery of demand after the domestic epidemic, the export of Xinjiang products is limited, and the interest rate hike has further suppressed global demand, weak demand and the cost support of strong ginning factories. In the case of great changes in the environment, cost support has been unable to resist the concentrated outbreak of negative factors, and finally formed negative feedback. At present, commodities including cotton have entered the stage of eliminating financial valuation as a whole, and the appreciation of the US dollar has further reduced the valuation of US dollar-priced products until actual demand appears. " Wu Jingwen said.

"From the perspective of the big cycle, the national reserve cotton has entered the net storage cycle. 20 14-202 1, the net storage of cotton in China reached 1 1.72 million tons, exceeding the net storage in the previous cycle. In order to ensure the regulation of the domestic cotton market, in the medium and long term, the number of purchasing and storage will be much greater than the number of warehousing. " Wu Xinyang said.

In Wu Xinyang's view, in the early stage, under the background of strong foreign cotton and large price difference, the State Cotton Reserve launched a series of actions to store and store foreign cotton, but the quantity and price are unknown. At present, under the industry cycle of global textile and garment consumption peaking, the domestic cotton spinning industry chain has been hit by the cotton ban in Xinjiang, and the national reserve control means may support the industry chain in the short to medium term. On the one hand, in order to ensure cotton farmers' planting profits and stabilize the price of seed cotton, during the acquisition period of 5,438+10 in June, the cotton price and the mentality of the ginning factory can be stabilized by stocking the market. On the other hand, in order to ensure downstream orders, we can discard the foreign cotton collected during the period of large price difference at home and abroad to meet the demand of non-Xinjiang cotton in the textile industry. In addition, when the national reserve is at a low inventory level and the internal and external price difference is upside down, it can meet the replenishment demand economically.

For the market outlook, Wu Jingwen believes that there may be oversold rebound after the rapid and sharp decline of the disk, but the fundamental demand is weak, the market's expected bottoming policy has not yet been seen, and the factors for rebound are lacking. It is expected that Zheng Mian will continue to explore the bottom, waiting for emotional digestion, and the disk will stop falling and rebound. But overall, due to macro deterioration and weak demand, cotton prices are expected to remain weak in the third quarter.

"Maintain the long-term view that the global cotton market is bearish. But for the domestic cotton market, the probability of national cotton storage regulation is increasing. Under the long-term bearish trend, we cannot ignore the impact of national reserve regulation on the market and need to grasp the price rhythm. " Wu Xinyang said.

This article is from Futures Daily.