Market Analysis: Analyze The Fluctuation Trend Of Zheng Mian And American Cotton In The Market From Four Stages

From the perspective of the market in 023, Zheng Mian has driven more topics and fluctuated more than American cotton. Since the beginning of January, the price of American cotton has fluctuated around the 75-90 cents/pound range. The overseas macro maintained a weak position to suppress the overall price rise of American cotton, while Zheng Mian has walked out of a wave of rising and falling markets relatively smoothly, and has risen for a longer time in China, while the trend of foreign cotton is relatively weak. From the market of Meimian and Zhengmian futures, it can be divided into four stages.

The first stage: the initial price rise stage. Zheng Mian (January to early February), operating range (13000-15500 yuan/ton), ICE American cotton (from January to the end of February), operating range is (80-88 cents/pound). Domestic shocks are rising, and the industry is not changing much. However, the epidemic situation in China has quickly peaked. At the same time, the market also expects the two sessions in the first quarter to give a favorable macro stimulus. Therefore, Zheng Mian rose strongly before and after the festival. The overall performance of American cotton is flat, and there is no obvious driving factor.

The second stage: price callback stage. Zheng Mian (early February to the end of March), operating range (15500-13500 yuan/ton), ICE American Cotton (from the end of February to the end of June), operating range is (80-75 cents/pound). At the stage of domestic price correction, due to the impact of macro risk aversion, and the cotton industry trading is still tepid, the price has been adjusted. In terms of US cotton, the expectation of the Federal Reserve's interest rate increase still shrouded the market, and the credit risk of overseas banks since the beginning of March has intensified the market's concern about economic recovery. Superimposed by the fact that the inventory of US clothing and clothing fabrics was at a high level in the same period, the contract data of US cotton in June continued to be depressed, and the overall fundamentals were not significantly driven, and the overall price pressure fell to the end of June.

The third stage: the main rising stage. Zheng Mian (from the end of March to the beginning of October), operating range (13500-18000 yuan/ton), ICE American cotton (from the end of June to the end of September), the operating range is (75-90 cents/pound). There are many positive factors at this stage in China, especially from the supply side. In the case of declining planting area and extreme weather, the domestic cotton output is expected to decline in 2023/24, and the seed cotton harvest is expected to run faster. In addition, the market has a relatively smooth rise due to the small import volume in the first half of the year and the gradual shortage of domestic cotton commercial stocks. In terms of American cotton, affected by the El Nino climate this year, American cotton and Indian cotton, which had strong expectations of high yield, were both affected by extreme weather in the third quarter. The drought of American cotton and the lack of rainfall in Indian cotton gave rise to many speculation topics. Overlapping China's production reduction and inventory concerns, domestic and foreign cotton prices rose in resonance.

The fourth stage: high level falling stage. Zheng Mian (from the beginning of October to the end of December), operating range (18000-14500 yuan/ton), ICE Meimian (from the end of September to the end of December), operating range (90-77 cents/pound). On the domestic side, the dumping of stocks since the end of July has gradually reflected the improvement of domestic supply. In addition, the expectation of quick recovery has failed. Market speculators have raced against the trend reversal. The demand in the downstream of the superimposed industry is obviously poor, and the barrier lake phenomenon of cotton yarn commercial inventory has obviously led to the decline of Zheng Mian's high level. Abroad, with the speculation of US cotton production reduction digested in the panel trading, more attention was paid to the demand side in October. The US cotton contract data was depressed, new orders in the markets of various countries were relatively weak, and downstream textile enterprises continued to lose money. Under the circumstances of loose supply and lack of demand, the international cotton price trend was under pressure.