Since early July, ICE cotton futures have gone through a “V” trend, with the high points on both shoulders being 64.90 cents/pound and 65.05 cents/pound respectively; although the main contract suddenly plunged from a high level on August 7, the intraday The bottom was once close to the 62 cents/pound mark, but overall from the perspective of technical aspects, fundamentals and external markets, the center of gravity of ICE futures continues to rise, and the upward test trend of 62 cents/pound has not changed. Cotton textile companies, trade The dealer may have missed the opportunity to sign and purchase the main contract of 59-62 cents/pound.
According to CFTC data, as of August 4, the long ratio of ICE cotton futures rose to +16.44%. At the same time, the ON-CALL price increased from 79,397 contracts on July 10 to 81,139 contracts, an increase of 1,742 contracts. . Some international cotton merchants and trading companies judge that the bottom of ICE’s main contract is still in the upward channel. It is a high probability event that bulls will break through 65 cents/pound or even 68 cents/pound again. This round of rebound that started in early April will last a long time and The increase is stable and confident.
Why is ICE “easy to rise but difficult to fall”, and why is it bullish and chasing higher? The views of cotton-related companies and investment institutions are mainly summarized as follows: ,
First, USDA has “supported” ICE futures from a fundamental perspective. First of all, the high temperature and drought in West Texas, the main cotton-producing area of the United States, lasted for a long time and the yield rejection rate was high; secondly, the proportion of good US cotton seedlings dropped significantly, and concerns about the yield and quality of US cotton in 2020/21 increased; thirdly, due to the 2019/2019/ U.S. cotton in 2020 was obviously “oversold”, and some contracts were forced to be transferred to 2020/21 for execution, stimulating the rise of ICE; finally, in August/September, hurricanes successively landed in U.S. cotton-producing areas, and funds are ready to seize speculation opportunities;
Second, China will still sign a large number of contracts to import 2020/21 US cotton in the second half of 2020. According to foreign reports, China and the United States plan to hold high-level talks on August 15 to assess China’s progress in implementing the first phase of the trade agreement; White House senior economic adviser Larry Kudlow said on Tuesday that the United States and China are first The phase one trade deal is “progressing well” and China is continuing to buy US goods, especially commodities, under the phase one trade deal with the United States. Yi Gang, governor of the People’s Bank of China, said he would continue to implement the first phase of the China-US economic and trade agreement and implement the financial reform and opening-up measures announced in recent years. The above situation shows that the first phase of the China-U.S. trade agreement will continue to advance at a high speed, and China’s import of U.S. agricultural products (including cotton) in the “post-epidemic” era will surely accelerate;
The third is the unlimited restrictions of the Federal Reserve and the U.S. government. The massive monetary stimulus policy cannot be stopped, and the “carnival” in U.S. finance, stock markets, and commodity futures continues. In terms of stimulus scale, the Republicans proposed a new stimulus package of US$1 trillion, while the Democrats supported a US$3.4 trillion package. The major disagreement between the two parties in the United States lies in the amount of the fiscal stimulus package, rather than whether it should be launched or whether it should be launched. When the emergency loans and grants issued are exhausted, the two parties in the United States will eventually reach an agreement to pass the stimulus package; Moreover, the US president can implement executive orders, but the scale of stimulus will be reduced, so the US stock market “will only be higher but not the highest”;
Fourth, global grain prices will rise strongly in 2020, and cotton still has a lot of room to rise due to the price comparison effect. Affected by epidemics, natural disasters, locust plagues, etc., global food and other crops have entered a growth channel in 2020. Not only are 240 million people in Africa suffering from hunger, but more than 70% of the population in some countries have encountered difficulties in obtaining food, affected by locust plagues. , India, Pakistan and other countries’ food production has also been severely damaged (Indian scholars predict that the locust plague may reduce India’s food production by 30% to 50%). On July 13, the “State of Food Security and Nutrition in the World 2020” released by the five major United Nations agencies It shows that there will be 130 million new hungry people this year, and 690 million people around the world are hungry. Therefore, the prices of bulk agricultural products, including wheat, rice, corn and other food crops, have been rising recently. </p
