In the past two days, ICE cotton futures have oscillated and corrected, and the main contract failed to hold 73 cents/pound. Judging from changes in daily trading volume and open interest, the long and short sides are not entangled, and the market atmosphere and overall performance are weak. . Industry analysis: First, with the Thanksgiving holiday coming, people are traveling and gathering more, and the outbreak of the new crown epidemic in the United States and Europe may accelerate again. Investors’ risk aversion has increased, and bulls have chosen to close their positions; second, in the past month or so, China has not only signed contracts for procurement The quantity in 2020/21 has continued to decline sharply (in the week of November 6-12, China had 0 new contracts and canceled 5,488 tons of contracts), and the number of contract cancellations is relatively large and increasingly frequent. Can Chinese buyers continue to do so before the end of 2020? A large number of contracts to import U.S. cotton remain uncertain; third, according to the report released by USDA, despite successive hurricanes and tropical storms, the total output, lint grade, and quality of U.S. cotton in 2020/21 will be higher than those in September/October. Expected; Fourthly, with the recent ICE main contract and December contract exceeding 73 cents/pound and 70 cents/pound respectively, the spot quotations of US cotton, Brazilian cotton, West African cotton, Indian cotton and so on have risen accordingly, regardless of 11/12/ In January, the transactions for cargo, bonded goods at ports, and customs-cleared foreign cotton were not strong.
However, the author judges that the current purpose of the main pullback of ICE is to gain momentum and prepare to further consolidate and hit the resistance level of 73 cents/pound, and continue to test 75 cents/pound and 75 cents/pound in December and January. The general direction and trend of 78 cents/pound remains unchanged, and 70-73 cents/pound is an opportunity for domestic cotton textile mills and traders with replenishment needs to get on board. Buyers should beware of “falling short”. . The reasons for the bullish outlook include the following:
First, the U.S. State Department informed staff that the transition to the Biden administration has begun, so it will then carry out larger-scale economic stimulus, long-term expansion of the U.S. dollar deficit and The “Made in America” plan will be put on the agenda (fiscal stimulus is to fight the epidemic and invest in infrastructure construction);
Second, the United States, China, Russia and other countries have made significant progress in the research and development of new coronavirus vaccines. Pharmaceutical company Pfizer said on Friday that it had applied for emergency use authorization (EUA) from the U.S. Food and Drug Administration (FDA) for its new coronavirus vaccine. The FDA expert group will discuss the use authorization on December 10. The vaccine is about to enter the vaccination and mass production stages and will be effective in fighting the epidemic (Pfizer estimates that by 2020, the company will produce 50 million doses of potential new crown vaccine globally by the end of 2021. (1.3 billion doses will be produced), the global economy, trade, transportation, cotton textile consumption, etc. are expected to accelerate recovery;
Thirdly, the situation in the two major cotton-producing countries, India and Brazil, is not optimistic, which provides opportunities for ICE to stabilize and Reversal provides necessary conditions. Although CAI has revised down India’s cotton production for 2020/21 to 35.6 million bales from 38-40 million bales, it takes into account the impact of prolonged rains and bollworm infestation on Telangana, Andhra Pradesh, Maharashtra and The impact in Gujarat and other states is significantly higher than expected, so India’s total output this year may be between 33 and 34 million bales; while Mato Grosso, Brazil’s largest cotton-producing area, suffers from sparse rainfall and drought due to the La Nina climate, so cotton sowing will be delayed. . According to the forecast of Brazil’s IMEA, the cotton planting area in Mato Grosso this year is expected to be 1.012 million hectares, a year-on-year decrease of 10.6%;
Fourthly, China has signed a large number of contracts to import American agricultural products, such as soybeans, corn, sorghum, etc. Prices continue to rise, forming obvious support for ICE. The latest report released by the U.S. Department of Agriculture shows that in the 12 months ending September 30 next year, my country’s total agricultural products purchased from the United States are expected to reach a record high of 27 billion U.S. dollars (approximately RMB 177.7 billion), including corn, Soybean imports have exploded. Regardless of the competition for land and price comparison effects for grain and cotton, the “window” for ICE growth is still open. </p
