The U.S. presidential election is coming to an end, and global capital markets have risen sharply. Crude oil futures have also surged due to the successful development of new vaccines. However, the recent trend of cotton futures is still weak. After falling below the 14,000 yuan/ton round mark, it followed ICE cotton weakly. rebound. There is a possibility for ICE cotton to rise in the later period, but it is less likely to exceed 73 cents/pound. Domestic cotton will also be weak. The futures value of the CF2101 contract is still high. It is not surprising that it will fall to 13,500-14,000 yuan/ton in the later period. .
The US presidential transition has limited support for cotton
Looking back at the cotton market trend, it was from the Sino-US trade friction in May 2018 that the United States continued to increase taxes on Chinese goods, causing a sharp decline in cotton. The new crown epidemic only accelerated cotton in the later period. Exploring the bottom. After the outbreak in China was brought under control, the market’s response to the COVID-19 epidemic gradually calmed down and prices were restored. However, the global trade environment, an important factor that suppressed the decline of cotton, has not improved. It is foreseeable that no matter who becomes the president of the United States, he will continue to contain China’s development, and trade is one of its important means. The prospects for improvement in Sino-US trade are not optimistic, and the support for cotton is very limited.
Cotton ushered in the off-season of seasonal demand
In September, textile enterprises made significant purchases of cotton, and raw material inventories gradually increased. However, in September In October, the main focus will be on digesting cotton inventories. This destocking process is likely to last until after the Spring Festival next year (as was the case last year), which means that cotton purchases have slowed down. At the same time, the operating rate of cotton spinning enterprises increased from 40% before the National Day to 60% in early November, and then failed to increase. This reflects that the operating rate of cotton spinning enterprises did not rise with the popularity of orders, and has now begun to slowly fall. These factors All reflect that cotton demand has begun to weaken seasonally.
The probability that the fund’s net long positions will begin to reduce its position and the price will reach a new high is small
The fund’s net position in ICE cotton is highly correlated with futures price trends. On May 12, the ICE Cotton Fund position began to turn into a net long position, and then continued to increase positions. ICE Cotton began to rise from 56 cents/pound. On October 27, the fund’s net long position in cotton was 74,000, once again hitting a record high. However, the price of ICE cotton began to fall. On November 3, the fund’s net long position dropped to 66,000. The sharp drop in ICE cotton futures prices on October 28 was obviously caused by funds closing their positions. Although the price is now starting to rebound slowly, we believe that the probability of the fund adding more orders in the later period is very small, and closing positions in the later period will suppress the price. The price of ICE cotton is expected to be above 70 cents/pound, and funds will be very active in closing long positions. If this rebound does not reach a new high, it will technically form an “M” head and start to fall again.
The domestic cotton adjustment range is 13,100-13,600 yuan/ton
From the perspective of domestic and foreign cotton price differences, the price difference is now as high as 1,600 yuan/ton Yuan/ton, obviously on the high side. Based on the average price difference between domestic cotton and imported cotton at 500-1,000 yuan/ton, the static reasonable price of domestic cotton futures should be 13,100-13,600 yuan/ton. If we take into account that ICE cotton may fall to 66 cents/pound, then domestic cotton prices will reasonably bottom out at 13,000 yuan/ton.
From a technical point of view, domestic cotton futures jumped short and opened higher after the National Day, breaking away from the 13,000 yuan/ton resistance zone, and then began their upward journey. The 30-day moving average is supported at 14,000 yuan/ton. After falling below it on November 6, it quickly stabilized and rebounded. The important support is at the 60-day moving average. It will rise back to 13,500-13,600 yuan/ton in the later period and will be the intermediate adjustment target support level. Cotton The probability of falling back below 13,000 yuan/ton, the starting point of this rising market, is very small.
The rising market price of cotton after the National Day is relatively “event-driven”. Global cotton supply and demand are still in balance, and the foundation for developing a large rising market is not in place. In the short term, domestic cotton has experienced a large increase, and there is a need for a rational return. </p