In the past week or so, the weather in the main producing areas of the northern hemisphere has become the reason for market speculation. Uncharacteristically, ICE futures have been rising during the peak harvest period and have continuously set new records. As of the close of trading on October 16, the main December contract of ICE futures closed at 69.92 cents. It once exceeded 70 cents during the session, setting a new high for this round of rise. As of the afternoon of October 19, the intraday high of the December contract was close to 71 cents.
There are reports that India’s new cotton has been affected by continuous monsoon rains recently. This year, India’s monsoon rains came early and left late and produced more than normal rainfall, causing floods and crop damage. So far, there are no signs of a complete end to the monsoon rains. The United States has been suffering from Hurricane Delta for nearly half a month, with heavy rainfall occurring in most cotton areas from the Delta to the Southeast. Although harvesting was carried out before the hurricane, most of the new cotton has not yet been harvested, and the cotton-producing areas will continue to receive heavy rainfall in the coming week, so the new cotton harvest is generally delayed by more than a week. At the same time, the sharp reduction in cotton production in Pakistan has led to a surge in import demand, and the general decline in cotton quality in Xinjiang, China has also attracted attention from the outside world.
Overall, there are many problems with cotton harvest in the northern hemisphere this year. Delay in new cotton harvest, production reduction and quality degradation are all causes of market speculation. From the consumer side, with the recovery of cotton consumption in textile mills and the recovery of U.S. apparel terminal demand, the problem of new cotton supply has become a catalyst for the market, and market speculation has artificially intensified the tight supply situation.
On October 16, ICE’s main December contract exceeded 70 cents, which is a milestone. As of now, the bullish atmosphere in the market is quite strong. On the one hand, it is led by technical graphics, and on the other hand, it is concerns caused by bad weather. If this situation continues, ICE futures will continue to rise to new highs. As of last week, ICE futures fund positions have changed from an initial net short position of 49,000 lots to a net long position of 56,000 lots.
United States: New cotton harvest is fully delayed and cotton color grade is expected to decline
Special News from China Cotton Network: October 9-15, 2020, in the United States The average spot price of standard grade in the seven major markets was 63.08 cents/pound, an increase of 1.95 cents/pound from the previous week and an increase of 2.11 cents/pound from the same period last year. That week, 36,653 packages were transacted in the seven major domestic spot markets in the United States, and a total of 253,387 packages were transacted in 2020/21.
The spot price of upland cotton in various regions of the United States has increased. Cotton merchants in the Texas region purchased a small amount of CCC loan cotton auctioned by the government in 2019. Foreign demand is light or average, and foreign inquiries in the Western Desert and Saint John regions have Prices are light; Pima cotton prices are stable and foreign demand is light.
That week, domestic textile mills in the United States made inquiries for cotton of length 41-4-34 and above. The loading period is from January to October 2021. The inventory of most factories can be maintained until the fourth quarter of this year. The overall purchasing attitude remains cautious, production capacity is still lower than pre-epidemic levels, and the main products are still front-line personal protective equipment and military items. The demand for US cotton exports is light, and there are inquiries for various special price varieties in the Far East.
Field operations in the southern part of the southeastern region of the United States have been delayed due to hurricanes. Heavy storms have dropped a large number of cotton bolls and shed a large amount of cotton wool. New cotton defoliation and harvesting are accelerating, with nearly 90% of the cotton wadding completed and more than 10% of the harvest completed; Southeast The harvest in the northern part of the region has been delayed due to the impact of hurricanes. New cotton is growing faster and spun out quickly, but the overall progress is a week late. The defoliation work is in progress. The spun out rate is around 90%, and the harvest is less than 10%. There is light rain in the delta area and the temperature has dropped. Coupled with the rainfall brought by the remnants of the hurricane, local field operations have been delayed, and the overall harvest progress is between 18-30%, at least one week behind previous years; most of the harvest in the southern delta area was before the hurricane made landfall, and the rainfall brought by the hurricane reached more than 200 mm, the maximum rainfall reached more than 400 mm, and field operations were fully postponed. The specific losses are still being calculated. The yield is not expected to drop seriously, but the color grade of new cotton may be affected. The impassable roads also make it difficult to process new cotton. The overall harvest is completed. 30-60%.
The harvesting in the coastal areas of Texas, the northern coastal areas and the Rio Grande River Basin has ended, and the processing work is basically completed; the harvesting and processing in western Texas have reached a climax, and the amount of new cotton sent for inspection There has been a steady increase, with early inspection results showing a color grade of 11 and a leaf dust grade of 1. The western desert area has high temperatures and no rain, and defoliation has reached a climax, and a few have begun processing; air quality is still a problem in the St. John’s region, and defoliation work continues, and the harvest has reached a climax; the Pima cotton area has completely defoliated, and the harvest has reached a climax, and the San Joaquin area has reached a climax. A small amount of top roller cotton is sent for inspection in Yorkin area and California. </p
