On July 16, ICE cotton futures opened for four consecutive days and continued to fall. After reaching a high of 64.90 cents on July 9, the market’s upward momentum gradually disappeared.
Recently, the rise in cotton prices has been attributed to the dry and hot weather in Texas, but the weather seems to be able to only push cotton prices up to this level. The fundamental situation of cotton is still pessimistic, including the epidemic, There are also other problems such as Sino-US relations and the global economic recession, but we can get a glimpse of it from the weekly US cotton export report.
According to the U.S. Cotton Export Weekly Report on July 16, as of the week of July 9, the net export contract volume of U.S. cotton for this year was negative. China canceled more than 8,000 tons of upland cotton contracts for this year, but at the same time added The same amount of upland cotton contract for next year. The market believes that China will continue to import US cotton in accordance with its commitments in the first phase of the agreement. Analysts believe that ICE futures will remain above 60 cents as long as China continues to implement the agreement.
In terms of macro, China has become the first country in the world to emerge from economic contraction. GDP in June achieved a positive growth of 3.2%, compared with a negative growth of 6.8% in the first quarter. In June, China’s gross industrial production increased by 4.8% year-on-year, up from 4.4% in May. The problem now is that retail sales in June were still down 1.8% year-on-year, which was only slightly better than the 2.8% drop in May.
On July 16, ICE futures bottomed out driven by speculative buying, and speculators continued to speculate on weather and production. Since April, the December contract has risen by a total of 14.50 cents. However, the recent rise has made the market overbought, triggering a correction for several consecutive days. However, in the face of the bleak weekly US cotton export report, the market still rebounded and closed higher, which is worth it. Play with it.
At present, the fundamental factor that dominates the market is still the weather. The situation in Texas and other cotton-producing areas is generally high temperatures and low rainfall. The weather in mid-to-late summer is extremely critical to crop growth. The market generally expects that the seedling situation in Texas will continue to deteriorate. Currently, the proportion of poor seedlings in the state is as high as 41%.
On July 16, the December contract closed at 62.54 cents, an increase of 0.41 cents from the previous day. So far, the December contract has fallen by 1.77 cents this week, increased by 1.66 cents this month, and fallen by 7.82 cents this year. </p