With only one week left before the Spring Festival, the originally dull domestic and foreign cotton futures markets suddenly experienced a sharp rise. Not only did some cotton-related companies and speculators feel unprepared, but some cotton manufacturers regretted that they had shorted the market.
Compared with the main CF2105 contract of Zheng Cotton that once again exceeded 15,500 yuan/ton in the past two days, the rise of ICE appears to be even more rapid (all contracts for this year were closed at the daily limit on February 4), and other contracts have also continued to refresh the past two and a half years. new highs.
An international cotton merchant said that it is the established goal for ICE to exceed 85 cents/pound, but such a violent increase is still relatively rare. There are prominent signs of a large increase in the combined internal and external market. On the one hand, a large number of ON-CALL point price contracts have short-term profits. In response to the “frightened bird”, the buyer and the seller may deal with it through various methods such as delayed price point, seller redemption or even cancellation of the contract; on the other hand, the cotton companies hedged by ICE have to add a large amount of margin to avoid being forced to liquidate the position.
Why did ICE suddenly rise sharply? The author combines the views of some cotton-related companies and investors to summarize as follows:
First, President Biden’s US$1.9 trillion aid plan may not only not shrink, but is also expected to be forcibly passed. Senate Democrats have recently taken action to clear procedural obstacles to advancing the plan, putting Biden’s $1.9 trillion economic stimulus plan on the fast track and increasing the likelihood that the bill will ultimately be passed on a party-line vote. This signal shows that regardless of whether Republicans come to the negotiating table, Democrats are determined to pass a relief package that provides more economic assistance;
Second, the rising trend of the COVID-19 epidemic in the United States has been contained, the “turning point” has gradually been consolidated, and then the Coupled with the widespread vaccination of the new crown vaccine in the United States, Europe and other countries (the probability of adverse reactions is very low), institutions and investors are confident in the victory of the global “anti-epidemic” in 2021, the accelerated economic recovery, and the retaliatory growth of cotton consumption. Rapid rebound;
Third, commodity futures such as crude oil, iron ore, and heavy metals rose violently, superimposed on the rise of the three major U.S. stock indexes across the board, and ICE rebounded under the influence of bulk commodities. According to statistics, on February 4, affected by positive news such as the decline in EIA crude oil inventories and OPEC+’s policy of maintaining output, Brent crude oil prices once exceeded the US$58 mark, and domestic crude oil prices rose by 3%, hitting a new high;
4 Some investment banks and institutions are speculating on factors such as U.S. cotton starting to be “oversold” in 2020/21. The global cotton planting area is expected to decline significantly in 2021, global cotton consumption will rebound rapidly and the economy will accelerate recovery. </p
