Regarding current market hot topics such as macroeconomic disturbances, new cotton acquisition, and opportunities and risks for traders, which are attracting widespread attention, China Cotton Information Network specially invited Wei Gangmin, chairman of Henan Tongzhou Cotton Industry Co., Ltd., to share his insights.

China Cotton Information Network: Hello, Mr. Wei! Currently, the US interest rate cuts are gradually being implemented, but macroeconomic data fluctuates repeatedly. How will the future macroeconomic situation affect cotton prices?

Wei Gangmin: The market's main focus remains on the trade implications of a US recession resulting from interest rate cuts. With the confirmation of further rate cuts in September initiating a cycle of cuts, the market is refocusing on the speed of the recession. The peak trading period driven by the monetization of fiscal deficits and macroeconomic demand pricing is over. The next phase will require simultaneous deleveraging by US residents and businesses to determine the speed of the recession. While cotton may experience short-term industry-specific disruptions, its overall direction remains consistent with other commodities.

       China Cotton Information Network The new season's acquisition is about to begin. Currently, the acquisition price expectation is weak, and the new cotton basis is relatively low. Last year, basis trading was not easy for traders. What opportunities do you think traders will have this year, and what are your trading strategies?

       Wei Gangmin: In recent years, cotton prices have fluctuated significantly, and the risk awareness of enterprises and traders has increased significantly. The use of derivatives such as futures to hedge risks is also increasing. If Xinjiang ginneries' acquisition is rational when the new cotton comes onto the market this year, and the new cotton basis is relatively low, it will be beneficial for traders to conduct basis trading. On the one hand, if the market provides good hedging opportunities, traders should actively hedge in line with prices to avoid risks; on the other hand, if the acquisition expectation is weak, the acquisition price is low enough, and the market does not provide good hedging opportunities, it is also possible to consider holding a certain amount of spot goods for short-term unilateral trading.

      China Cotton Information Network: What risk factors may exist in cotton prices in the new season, and how should traders avoid potential risks?

       Wei Gangmin: Macroeconomically, the magnitude and frequency of US interest rate cuts cause repeated disturbances to commodity prices due to concerns about a US recession. From a supply perspective, although the window for weather disturbances is getting smaller, it still exists, such as the recent hype surrounding hurricanes in the US. India's cotton planting is nearing completion, but harvesting is still some time away, and yields may also be affected by future weather conditions. In terms of demand, various industries in China are showing signs of contraction, focusing on cost reduction and efficiency improvement. Domestic demand is unlikely to improve, and current trade frictions between countries and the Xinjiang cotton ban are leading to weak external demand. Therefore, although cotton prices are currently in a low-price range, the increase in supply and weak demand mean that unilateral trading is still relatively risky and difficult. Regarding risk mitigation, the first priority is risk control, effectively utilizing the price discovery and hedging functions of derivative tools such as futures, and primarily engaging in spot and futures combined basis trading.

       China Cotton Information Network: The acquisition of new cotton is about to begin, becoming a market focus. What do you think the acquisition price trend will be this year?

       Wei Gangmin: Given the overall weak economic situation and a bumper harvest year for agricultural products, including cotton, the center of gravity of the seed cotton acquisition price is expected to be low. However, the fact that ginneries have significant production capacity also exists, so the acquisition price is expected to open flat and remain stable, or open low and remain stable.

       China Cotton Information Network: Finally, Mr. Wei, could you predict the approximate price fluctuation range for cotton in the new season?

       Wei Gangmin: Looking at the new season, the macroeconomic situation will remain stable for the time being. As long as the issues of effective domestic demand and high leverage remain unresolved, resident consumption willingness and confidence are expected to remain weak, so there are not expected to be significant macroeconomic fluctuations. From a fundamental perspective, cotton textile consumption is unlikely to show any highlights under the macroeconomic situation, but the current valuation of cotton has also entered a relatively low range. According to cyclical theory, cotton is expected to revert to the mean, and the price of cotton is expected to fluctuate within a range of around 14,000 with a fluctuation of 1,000 points.

       China Cotton Information Network: Thank you for your insightful sharing!