Global Cotton Market Continues To Fall And Market Psychology Has Recovered
In November 25th, the market was again facing the reality of economic downturn. The decline of the US, Europe and Japan made the cotton demand prospect more worrying. The US dollar fell to the lowest point since the beginning of November, which has not attracted the attention of the market. The reason is that the market risk is decreasing, the US dollar index is deteriorating and the US rescue policy has led to a further expansion of the deficit.
On the same day, the Federal Reserve announced two new initiatives to solve the problem of mortgage loans, reduced consumption and loans to SMEs, including the purchase of $800 billion in debt.
Commodity futures first rose and then fell, while Goldman Sachs index and CRB index respectively rose 1700 points and 600 points respectively. In the energy sector, crude oil fell more than 6%, gasoline fell by 3.28%, and natural gas dropped by 6.37%. Cotton spot trading is still struggling. The difficulty of opening the letter of credit seriously affects the procurement of textile mills.
Pakistan's domestic turnover was active, and the paction price continued to drop to 41.54-44.79 cents. Insufficient supply of gasoline made it difficult for garment production. The India ginning factory Association has struck a boycott of the government's lowest support price. In September, India's cotton yarn output decreased by 8.5% compared with the same period last year, the biggest decline in 5 years, and cotton output decreased by 10.1% compared with the same period last year.
Cotton consumption in India may decrease by 7-10% in 2008/09. The Minister of trade in India expressed concern about the issue and said that 700 thousand workers would be laid off in India in the next 5 months.
ICE futures fell sharply. In December, the contract issued 3239 delivery notifications, with 4968 issued at present. The futures volume is 11831 hands, and the option volume is about 14300 hands. The problem of cotton market will not be solved quickly, and the demand for cotton will be much more frustrated than that of the market.
Nevertheless, market psychology has been restored, and ICE futures also show a hint of stabilization. If the March contract falls below 41.90 cents, the bottom will fail. The continued decline of the US dollar index will play a key role in the bottoming of cotton prices.
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