The management takes action to “steal the boiling water”. To stabilize the cotton market, it still needs to “take the bottom of the cauldron”

The cotton market in April corresponds to the saying “April is the most beautiful day in the world”. The “blowout” in cotton prices has shocked the world. The management hurriedly took action and gently poured cold water on the fire, but the market’s “soup” was still boiling. If it were not “drawn from the bottom of the cauldron”, speculation is likely to resurgence. If excessive speculation is not curbed, it will put years of trouble The results of China’s cotton reform were in vain.
As the saying goes, “Spring is here, idiots are busy.” Whether it is futures or spot, the cotton market in April is indeed crazy. Today (4.29) is the last trading day in April, and the positive line of the CF1609 contract is at the price of 12555 at. The “blowout” trend of cotton futures prices in Zhengzhou has reached this point, and it has turned a gorgeous corner, quietly waiting for the country to sell reserves in May.
In fact, I have always been in favor of moderate speculation of funds. Speculate is a neutral word and also contains the meaning of “thinking, inferring, and taking risks”. As long as there is no insider trading or market manipulation involved, as long as reasonable, legal and sensitive traders find out There is a market opportunity, but others are too slow to respond. If you seize the opportunity, you can make a profit. Why not take advantage of it. The main thing is that this kind of speculative trading cannot be excessive or normalized. Who told you that market supervision is unfavorable, who told you to repeatedly delay releasing details of the reserve sell-off, and who told you to repeatedly go back on your word on your policies? This wave of cotton prices in April has been studied and tracked by many traders at investment companies for many years. They finally waited for an opportunity to take action, and everyone would take advantage of it. The blame lies with the “businessmen” who gave these “speculators” the opportunity to go long. In fact, many times the basic judgment of industrial customers on the market is correct. The original policy message was to sell reserves in March, so those industrial hedging companies that are really waiting for the state to sell reserves in March have invested a lot of money in positions to ensure production. and trade are proceeding normally, but the policy has made a very strange U-turn that industrial funds cannot understand. It has repeatedly delayed the announcement of dumping reserves. Speculative funds seized the opportunity and frantically promoted speculation, so the corporate arbitrage The deeper the guarantee, the deeper the position, and the funds that continue to cover positions accumulate a large amount of positions, which arouses the interest of OTC funds. In the past, a small amount of hedging was a “small mahjong” and the capital geese were not interested. But now the huge positions have made the market a “mahjong”, and the huge industrial fund positions have attracted capital “sharks” . The futures market is like a casino. It is not afraid of you winning money, but afraid that you will not come. It is not afraid of you losing money, but it is afraid that you will close your position and leave. Faced with this kind of opportunity of “Money makes people stupid” and the “red envelope market”, how could traders let it go. However, don’t be too excessive in everything you do with speculative trading. Otherwise, the several liquidation incidents in history were the result of speculative trading being overconfident and unforgiving. I still recommend everyone to watch the movie “The Big Short”. The boss gave you the “carrot”, but don’t forget that the “boss” also has a stick in his hand.
Today (4.29) is the last trading day of April. Looking back at the market situation in April, on the daily chart and weekly chart, the short arrangement of the 5M-10M-30M moving average system has not yet formed. Although the short-term 5-day moving average has opened to down, but the “death cross” has not yet been effectively formed. The “soup” in the market is still boiling, but the management has poured cold water on it, but the firewood at the bottom of the cauldron continues to burn. A closer look shows that some bulls are still lurking inside (or have not had time to escape), but they dare not act rashly. Some bullish funds are a bit unwilling and are likely to make trouble again.
In my humble opinion, the market in May will not be too shocking. The speculative bulls must give the management some face. After all, in China, the word “speculation” still has a derogatory connotation. Just give up when things go well. It’s the best policy. In May, there are basically not many variables and hype topics that I can think of, such as stockpiling, the downturn of the Canton Fair, the reduction of sown area, etc. The traditional old topics such as abnormal weather have also been hyped to the point where there is nothing new.
As for June, I don’t know. I’m not a fortune teller and I won’t speculate on the long-term market situation. However, for our yarn industry, June is the traditional off-season. There is a saying in Cantonese: “Five poverty, six urgency, seven recovery”. I hope that cotton will return to fundamentals as soon as possible after being speculated.