Look at the quantitative indicators and lead the peak with wisdom.
Today I saw a very funny news, saying that it was because of the cessation of imports of Chinese cotton that it was impossible to manufacture more missiles and shells to aid Ukraine.
According to Agence France-Presse 2**, an European Union** said that it is difficult for France to continue manufacturing missiles and artillery shells due to the lack of gunpowder. The shortage of gunpowder is due to the lack of raw material nitrocellulose. A few months ago, France stopped importing Chinese cotton. Isn't this news interesting, this may be the highest moment for cotton. Today let's talk about the investment opportunities of cotton.
Fundamentals of cotton
India is the world's largest cotton producer, China is the second largest cotton producer and the first cotton importer, and the United States is the third largest cotton producer. The proportion of production is as follows:
India's cotton production in 2023 and 2024 is expected to be 26 million bales, compared to 23 million to 25 million bales previously, according to a US agency. With higher-than-expected production and weak demand, India consumes about 24 million bales of cotton a year, with the rest mainly used for export.
Domestic cotton production also increased sharply last year, and soon a new round of cotton planting season, this year Xinjiang experienced heavy snowfall and sandstorms, and other parts of the country also experienced winter rains and other natural disasters. The market is a little worried about the cultivation of agricultural products, so agricultural products have risen for a period of time recently. Like apples, red dates, etc., are particularly prominent.
Recently, there has also been a wave of better cotton spots. As shown below:
With the improvement of agricultural technology, as long as there are no major natural disasters, cotton production is increasing every year, and the output of the first end has increased greatly, but the demand side has not increased much. The vast majority of goods in this social environment are supported by inflation. When inflation is not good, it is difficult for commodities to improve.
Cotton on the financial side
Last year, cotton ** was very exciting, and there were 2 large households joining forces to short. I've written about them a few times, and it's got the attention of the whole market. Later, they liquidated their positions, and the profit was not very large.
For many large households, the market also has the "law of the dark forest", they like to come quietly, and then go quietly, once they appear to be discovered, then they may be wiped out at any time. Speaking of which, I dig big accounts every day, which can be regarded as blocking their financial path.
Now the cotton net long and net short positions are not large, China Merchants ** this seat short is very resolute, this wave of ***, it rises more and more short positions short, currently holding a net short single 2330,000 lots. This method of operation is quite **. Zhongtai ** is currently the largest net long, it holds 250,000 lots of net long orders.
There is a large net long in cotton ** in the national dollar ** seat to do more than 4,000 hands, this seat started around 15,000 **, after a few quick transactions began to hold a position, so far it has been maintained for 2 months ** no major changes. This big account is considered to be more patient than I have seen, and you can pay attention to whether this big account has taken profits today.
Property in the large, this seat should be corporate hedging funds, last week hedging funds at a relatively high level began to turn over short, the current net short order has 2566 hands. The logic of hedging is that when the inventory of some enterprises is too large and the short-term cotton is better, the inventory cannot be cleared in the spot market, so they will choose to hedge when the futures price is better.
In general, after you look at the capital data, you should try to keep up with the rhythm of large investors, and first pay attention to the cost line of large investors and the holding style of large investors.
The technical side of cotton
Today's cotton **1%, the number of positions has decreased compared with last week, after the previous wave of ** trend fell down, it is normal for funds to withdraw to wait and see.
On the disk, after falling below the resonance band red line indicator last week, it broke through the 3-layer green line again today, but ** has not completely broken through the green line support. The short-term upward pressure is the pivot area (yellow dotted box on the disk), and rational technical trading is to wait for a complete break below the green line, or ** to the pivot area and then short.
Simply look at the **, today is considered to be below the previous trend, and the back is bearish, but based on the previous trend, every 200 points in the short term is support, and now 16000, the following are technical support.
To sum up, cotton fundamentals is the pattern of strong demand and weak demand, last year's wave fell from 18,000 to 14,500, and this wave of ** to 16,500 will not rise, the main reason is that the demand side is weak. The technical side looks downside in the later stage.