Recently, the main ICE cotton futures contract has once again started to rebound against 80 cents/pound, breaking through 81 cents/pound, 82 cents/pound, 83 cents/pound and other levels (the intraday high of 83.91 cents/pound). cents/pound), constantly setting new highs in the past two years. Judging from the disk, spot market sentiment and the expected positive US cotton export weekly report, the probability of ICE taking advantage of the situation to open the 85 cents/pound mark has increased; the disk price of Zheng Cotton CF2105 contract continues to consolidate and accumulate strength at 15,000-15,500 yuan/ton. Under the circumstances, the price difference between domestic and foreign cotton will continue to narrow.
Although ICE is expected to break through 85 cents/pound and open an oscillation range of 80-85 cents/pound, the author judges that the conditions for the short-term main contract to stabilize at 85 cents/pound are still immature. The reasons are summarized The following points are as follows:
First, although the Biden administration has launched a US$1.9 trillion epidemic relief plan, there is still great uncertainty as to whether it can be passed by Congress. After just enacting a $900 billion spending bill in December, even moderate Republican senators have expressed doubts about the need for another huge bailout package. Some Republican lawmakers on Tuesday refuted Treasury Secretary nominee Yellen’s statement that Biden’s bailout plan has encountered resistance; investment banks such as Goldman Sachs and Morgan generally believe that both parties are likely to compromise and reduce the size of the stimulus plan to 11,000 About US$100 million;
Secondly, the United States is still the “epicenter” of the COVID-19 epidemic. The crisis cannot be effectively contained in the short term and is far from over. President Biden unveiled a national strategy to combat the coronavirus on Thursday while warning that the situation will get worse before it gets better, with the U.S. death toll from COVID-19 rising by 100,000 next month. Survey results show that nearly 90% of Americans believe that the epidemic in the United States has not been effectively controlled;
Third, Sino-US relations still face great challenges, and comprehensive improvement and recovery are very difficult. In four intensive hearings in recent days, Biden and his team collectively stated that the new administration may continue the Trump administration’s tough policy toward China. This will still face severe tests in Sino-US relations and may directly affect the market. risk sentiment. Yellen said that the United States is “prepared to use a full set of tools” to deal with what it calls “dumping products, erecting trade barriers and providing illegal subsidies to companies”;
Fourth is low-price India in 2020/21 The influx of cotton into the international market, the increase in Australian cotton production and the expected depreciation of global currencies against the US dollar are not conducive to the rapid rebound of ICE. Due to the high cost performance of Indian CCI cotton, large export volume and guaranteed quality, coupled with the advantages of short transportation distance and low freight, buyers from China, Vietnam, Bangladesh and other Asian countries are interested in Indian cotton in 2019/20 and 2020/21. Enthusiasm for purchasing is high; Australian cotton output is expected to reach 2.2 million bales in 2020, an increase of more than 260% compared with 2019. There is strong demand from yarn mills in China, Vietnam and other countries. </p
