What Will Happen To Cotton Prices In A Month After SARS?

Last week, the outbreak of the new crown virus pneumonia caused panic in the market. The market panic intensified and led to the collapse of the financial market. Commodity futures and stock markets suffered bloodbath. Cotton futures were no exception. In the week, ICE futures began to plunge straight from Monday, and the May contract fell 7.51 cents, or 10.9%. China's PMI index plunged to 35.7 in February, a record low, and this week's market opening is likely to be too bad.

The outbreak of the new crown virus pneumonia has completely changed the market trend outside China, and the market is completely plunged into panic, forcing the fund to sell in full and frantically short of the market. Finally, the impact of the epidemic on the global economy and the cotton market depends on how well the situation is controlled and the actual impact on cotton demand. After almost six weeks of suspension, China's manufacturing industry has just begun to recover slowly. In February, PMI ultra-low should also be expected in the market. It is estimated that it will take several weeks for the manufacturing industry to return to normal. During this period, the spread of the epidemic in other parts of the world may slow down manufacturing production, especially in the Indo Pakistani region.

Due to the fact that the factory resumption and production are not good enough, the new crown virus pneumonia will obviously impact the short and medium term demand. However, after a certain period of time, the raw material inventory of the factory will be consumed in large quantities, and then the purchase will have to be increased. Therefore, the market demand will also recover in the long run. During the SARS period in 2003, cotton futures in New York at that time fell 20% rapidly in the six weeks from the end of April to the beginning of June, but by the beginning of July, most of the lost land had been recovered. This time, ICE futures began to fall by 15% in mid January. From the current situation, the impact of new crown pneumonia on the global economy is far more than that of last time. Cotton prices still have room to fall, but with the release of panic, countries will take positive measures, and the financial market will gradually find the bottom.