The Cotton Market Trend In The Trade War Between China And The United States

Analysis of cotton price trend

Due to the uncertainty of trade war and weather, we believe that for the later market trend,

(1) if a trade war breaks out in an all-round way and domestic cotton demand expectations are pessimistic, cotton prices may need to break the cost before the opportunity to rise is expected;

A full outbreak of trade war between China and the United States will seriously affect the decades-long process of global economic integration. The negative impact on China's cotton demand, in addition to the possible direct impact of us tariffs on Chinese textiles and clothing, may be exacerbated by the contraction or impact of the global economic downturn.

(2) if the trade war is settled, the weather will become the dominant factor, affecting the fluctuation pace of cotton prices;

If the sino-us trade war is settled soon, cotton supply and demand will return to the original track. That is, China's cotton reserve inventory continues to decline, the New Year cotton supply and demand gap. Whether it is boosting supply or dampening demand, higher prices are needed to solve the problem.

It is expected that the future price center will shift up, and the weather will become the focus of attention, affecting the fluctuation pace of cotton prices.

(3) if the trade war is protracted and protracted, the progress of trade war and the supply and demand of cotton itself will affect the cotton price trend alternately.

From the current interpretation of the situation by all parties, the possibility of a long and complex trade war between China and the United States is high.

The cotton market in the context of trade war uncertainty, weather impact or trade war with the progress of the situation alternately affected cotton price trend. But from the trade war uncertainty itself, or will affect downstream orders, not conducive to domestic cotton price trend.

Major risks

(1) macro uncertainty

As the federal reserve continues to raise interest rates, a sharp depreciation in the exchange rates of cotton producers or cotton producers would be detrimental to cotton prices.

(2) weather conditions

Weather conditions are the focus of late attention. If the late weather is favorable for cotton growth, the combination of high cotton prices in May will lead to the expectation of seed expansion, or a period of bearish cotton price trend.