Since late September, ICE cotton futures have had “four consecutive positives”, with the main contract breaking through 90 cents/pound, 92 cents/pound, 95 cents/pound, 96 cents/pound and other round numbers. The cotton textile enterprises and middlemen who did not enter the market in a large scale at the cent/pound price and missed the market are full of regrets and have complicated mentality.
As for the reasons why ICE rebounded violently last Friday and strongly opened the “window” of 95 cents/pound, the industry summarized the following four points: First, in recent days, New York crude oil futures, Chicago COMEX copper prices and other bulk commodities The continued rise in goods has stimulated the stabilization and rebound of ICE; secondly, Sino-US relations have eased and the implementation of the first phase of the trade agreement has been accelerated. The settlement of Meng Wanzhou’s case has raised expectations for a certain degree of easing of Sino-US relations; third, one-third of the cotton-producing areas in Punjab, India, have suffered from pests (about 33%), with widespread crop damage and ongoing disasters. aggravated, “assisting” ICE to regain lost ground; fourth, low inventories and strong demand have made funds and bulls full of expectations for the growth of cotton imports from China and Southeast Asian countries in 2021/22.
So under the premise that ICE exceeds 96 cents/pound, should cotton spinning companies continue to chase the long and squeeze the short? The author’s opinion is that there is a high probability that ICE will break through the annual high of 96.71 cents/pound, and it may test 98 cents/pound or even challenge 100 cents/pound. However, once it breaks through the previous high, you need to be cautious when doing long, and ICE will enter ” “Easy to fall, hard to rise” range.
First of all, the global COVID-19 epidemic is still there. With the arrival of winter and the school season, premature relaxation of epidemic prevention measures in Europe and the United States and other countries, and uneven global vaccination, there is great uncertainty about the “black swan” of the COVID-19. sex; secondly, the cotton planting area in southern hemisphere countries such as Brazil and Australia will increase significantly in 2021/22 (Brazilian cotton production is expected to increase by 10%); thirdly, the Federal Reserve finally released a clear signal: Taper is “certainly confirmed” during the year, which will have a negative impact on the financial market. , the impact of the commodity futures market cannot be underestimated; in addition, some international cotton merchants and investment banks have judged that the frequency of hurricanes and storms encountered in the main cotton-producing areas of the United States in 2021/22 is significantly weaker than in the previous two years, and although growth lags behind year-on-year, it is good. The seedling rate has increased significantly, so the USDA may further increase the 2021/22 US cotton production and ending stocks, which is not conducive to the increase of ICE.
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