The USDA report shows that from October 23 to 29, 2020, the net signing volume of U.S. upland cotton in the 2020/21 season was 26,200 tons, a 60% decrease from the previous week. Although China signed a contract of 10,700 tons, at the same time The U.S. upland cotton contract was canceled for 8,686 tons, while the number of canceled contracts in Bangladesh and Turkey reached 10,000 tons and 5,012 tons respectively, significantly exceeding industry expectations. However, due to the “four consecutive positives” in the U.S. stock market on November 5, the overnight reversal of votes for Democratic candidate Biden, and the expectation that the U.S. government will introduce a huge fiscal stimulus package after the election, ICE’s main contract is still at 70 cents. / pound is consolidating and gaining momentum (the impact of fund transfer is not significant).
Regarding the large number of cancellations of the 2020/21 US cotton contracts in late October, several foreign businessmen and cotton trading companies summarized the following points: First, Recently, the COVID-19 epidemic has made a resurgence in parts of Europe, America and Asia. Some European countries, such as France, Germany and the UK, have implemented city closures again. Not only has the economy, trade, exchanges, etc. been greatly affected, but also logistics, transportation, etc. will be extensively delayed. Countries Textile and clothing companies have insufficient confidence in whether European and American orders can be executed; secondly, for more than half a month, the basis difference of U.S. cotton has increased along with the basis difference of Brazilian cotton (including shipping schedule, bonded duty, customs clearance), and the price competitiveness of U.S. cotton has been continuously affected. weakened, the price difference with Xinjiang cotton narrowed, and the price difference with Indian cotton widened; thirdly, US cotton in 2019/20 has already been oversold, and some US cotton exporters and international cotton merchants hope to use 2018/19 old cotton, In 2019/20, low-quality and low-grade cotton was substituted for delivery, but was rejected by the purchaser, and the number of contract terminations increased; fourth, considering that India’s cotton production in 2020/21 may reach 38-40 million bales, plus the balance of the previous year The transfer inventory exceeded 10 million bales, so the Indian government and CCI rushed to sell lint cotton to Bangladesh at low prices. On the premise that the supply was guaranteed, it was logical for Bangladeshi yarn mills to cancel the US cotton contract; fifth, the main US cotton producing areas were frequently hit by hurricanes this year , tropical storms, and widespread rainfall, international cotton traders and spinning mills are worried about whether the grade and quality of U.S. cotton in 2020/21 can meet contract requirements. Purchases are suspended until the news is clear. In addition, the recent depreciation of the RMB, the Indian rupee and the currencies of Southeast Asian countries against the US dollar, and the increase in the cost of contracted imports of US cotton have also disrupted US cotton sales. </p
