China Cotton News: As for the reasons why ICE dropped to the limit on March 25, the industry generally believes that there is excessive panic, and the reasons for bulls and funds trampling on each other can be summarized as follows Three points:
First, some international brands and international institutions have excluded Xinjiang cotton and its products from their commercial activities based on lies and false information, which has triggered controversy among all walks of life in China. Strong condemnation and boycott by the industry, global cotton consumption may be greatly affected;
Second, Fed Chairman Powell unexpectedly released a “hawkish” signal (during the U.S. economic recovery) After “making substantial progress” with its inflation target, the Federal Reserve will gradually reduce the scale of its purchases of U.S. Treasury bonds and mortgage-backed securities) and the worsening epidemic in Europe have triggered a sharp decline in the prices of commodity futures such as crude oil, energy, chemicals, and agricultural products;
Third, the number of US cotton contracts signed in China for 2020/21 has dropped sharply since mid-March (USDA statistics, US cotton contracts for 2020/21 in the week of March 12-18 and shipment volume dropped significantly compared with the previous week). Due to relatively large differences in the high-level meeting between China and the United States, no agreement was reached.
According to feedback from some foreign businessmen and domestic cotton importing enterprises, affected by the continuous decline of the main ICE cotton futures contract, the ON-CALL point price contract has been rapidly concluded recently. As ICE fell below 80 cents/pound, cotton spinning mills and traders from China, Pakistan, Vietnam, Indonesia and other countries gradually recovered their enthusiasm for inquiries and orders for foreign cotton shipments and bonded cotton.
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