Cotton half annual report: cotton price weakness is difficult to change focus on macro and new cotton planting
In the first half of 2022, domestic cotton futures prices as a whole showed a weak trend of shock, and zheng's main cotton contract from January to May maintained a range of 20,000-22000. At the end of May and the beginning of June, under the macro bearish and weak pattern of the industry, cotton fell sharply, falling from 21000 to 17000. The contradiction between supply and demand, which continues from the end of last year, has not changed significantly. The problem of cotton ginning is difficult to solve and the sales progress is slow. Downstream demand to maintain a weak pattern for cotton procurement enthusiasm is not high; In addition, the United States cotton prices also fell high.
Looking forward to the second half of the year, macro, the Federal Reserve rate hike expectations still affect the market. The situation in Russia and Ukraine is still not improved, crude oil and food prices remain high, economic growth prospects weaken, stagflation pattern formed. Stagflation has a great impact on bulk commodities. Due to economic stagnation and rising inflation, consumption will be suppressed to a large extent and demand will be more depressed. Demand side for industrial products support strength will be significantly weaker. This will be reflected first in the price of manufactured goods. Industrial prices are still expected to be affected, cotton cotton yarn downstream orders are expected to improve. In addition, stagflation for Europe and the United States will also have a negative impact on the stock market, the overall negative for consumption will also be negative. Overall, in the second half of 2022, cotton factors are more complex, on the one hand, weak downstream demand constraints cotton upside space. But the new season cotton cost and downstream low raw material inventory is still expected to support cotton, overall, the domestic supply and demand situation is still not optimistic. Cotton is expected to maintain a wide range of shocks in the second half of the trend, the need to pay close attention to macro and policy dynamics.
Technically, cotton in January-June 2022 shock down, there is some support around 15000, there is some pressure around 18000 above. It is expected that in the third quarter of 2022, cotton will maintain a weak shock trend, and the sowing situation and consumption situation of new cotton are worth paying attention to.
Source: Founder Zhongzheng Futures
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