Hidden Worry Is Still Difficult To Change Trend In Zheng Cotton Trend.

In the past more than a month, the new crown pneumonia epidemic in China has been controlled, and the market mentality is stable. Zheng cotton presents a narrow oscillation trend. Although the negative effects of the epidemic will gradually fade, there are still many worries in the cotton market.

Downstream demand is expected to restart

The number of new cases of new crown pneumonia has been on the high level throughout the world in April, and has remained high since May. From the specific data, Europe is in a downward path, the United States is at a high level, and Russia, Brazil and India are growing. From the perspective of economic volume analysis, the latter stage will gradually improve.

In May, Europe and the United States will gradually resume work to restart the economy. Italy and Belgium lifted restrictions gradually from May 4th; Germany allowed small shops to reopen in April 20th, schools reopened in May 4th; May 11th, France ended the blockade period; the United States restarted the economy; Canada was expected to follow the pace of the United States. As a result, downstream demand will gradually recover in May, but the degree of recovery remains to be seen.

New cotton planting is successful in main producing countries

From 2020, Xinjiang will continue to implement the cotton target price policy, the target price level will be 18600 yuan per ton for three years. The continuation of this policy has stabilized the planting area of Xinjiang. According to the fourth cotton planting area survey of China Cotton Association in 2020, the intention area of cotton planting in the whole country was 46 million 182 thousand and 600 mu, down 4.10% from the same period last year, and the decrease was 0.93 percentage points lower than that of the previous period. At present, cotton planting in Xinjiang is basically over. The weather is suitable and cotton grows well.

According to USDA report, the planting area of the United States and cotton is expected to be 13 million 703 thousand acres, which is basically the same as that of the previous year. The decrease in the central and Southern cotton and Southeast cotton areas was the most obvious, with a decrease of 160 thousand acres and 150 thousand acres respectively. However, due to the significant increase in cotton planting area in southwest cotton region, especially Texas, the total area in the United States decreased by only 0.3%. The cotton planting situation is also relatively smooth. By May 3rd, the US cotton sowing schedule was 18%, leading to a continuous lead over the same period last year and five years.

Although cotton prices are at historic lows, cotton production will not drop substantially in the new year.

Sino US relations focus again

Over the past few months, the epidemic has led the cotton market. With the control of the domestic epidemic and the approaching of the US general election, Sino US relations may become the focus of the market again. China has been following the first stage economic and trade agreement signed at the beginning of the year, which has made efforts for normalization of trade between the two sides, while the United States has shown no sincerity of cooperation. During the May 1 holiday period, the US cotton fell sharply, which is the market's concern about this problem.

In short, the global epidemic is gradually improving, and downstream demand is slowly recovering. However, the growth of new cotton is good and the supply is loose. Cotton prices remain under great pressure. In the post epidemic era, Sino US relations have become the focus of attention of the market and constitute a certain suppression of cotton prices. Later cotton prices continue to be vulnerable to bottom up probability.