On the evening of June 30, the cotton market and cotton circle changed from being calm for several months to becoming extremely lively. First, the State Administration of Grain and Material Reserves and the Ministry of Finance of the People’s Republic of China jointly issued an announcement that from July 1 to September A total of about 500,000 tons of central reserve cotton will be arranged to be rotated out during the 30th of March. The difference from the past is that a “circuit breaker” mechanism of 11,500 yuan/ton has been set; second, a report released by the USDA shows that the actual sown area of U.S. cotton in 2020 It was 12.185 million acres, a year-on-year decrease of 11.3% (the upland cotton area was 11.99 million acres, a year-on-year decrease of 11.2%). As soon as the two blockbuster news came out, ICE and Zheng Cotton both started rebound mode, and the confidence of bulls and funds continued to recover.
As for the rotation of reserve cotton from July to September 2020, since “rumors” have been floating for more than a month, cotton-related companies, investors, and institutions have basically digested it. Therefore, the rebound rate of Zheng Cotton CF2009 contract , the intensity is relatively cautious; however, the USDA has significantly reduced the actual sown area of US cotton, which greatly exceeds the expectations of all parties (according to the planting progress announced by the USDA every week, the market generally expects that the area announced this time will not change significantly from the estimate at the end of March) Even expecting a slight increase), several international cotton merchants and large import companies said, “Unexpectedly, Americans are so good at playing”, which caught people off guard.
A survey by the US “Cotton Farmers Magazine” from November to December 2019 showed that the intended cotton planting area in the United States in 2020 was 12.082 million acres, 12% less than the actual planting area of 13.72 million acres in 2019; On February 16, the NCC estimated that the intended cotton planting area in the United States in 2020 was 13 million acres, a decrease of 5.5% year-on-year; and the report released by the USDA at the end of March showed that the intended cotton planting area in the United States in 2020 was 13.7 million acres, a decrease of 1% year-on-year. Just when cotton exporters, trading companies, and cotton-using companies generally believed that the cotton planting area in the United States in 2020 was “calm and sluggish” year-on-year, the USDA suddenly “started” and increased the actual planting area to the end of 2019 according to the “Cotton Farmers Magazine” The results of the investigation were closer, and the glasses of traders and short sellers were shattered on the ground.
Why does the USDA reduce the actual sowing area of US cotton so significantly? The author believes that there are the following three factors: First, the first phase of the China-US trade agreement is “complete”, and China is actively and fully implementing the import of US agricultural products. Regardless of whether ICE rises or falls, Chinese buyers do not have much choice; second, in June Since then, Texas, the main cotton-producing area of the United States, has been experiencing hot, dry and windy weather (a small amount of rainfall has little effect on alleviating the drought). Some areas may have missed the sowing season or barely planted seeds (seedling emergence and growth deviations); third, the 2019/20 US cotton season Already “oversold”, the direct result of the rise in ICE is that the number of buyers canceling contracts has dropped significantly; at the same time, it has stimulated buyers from Vietnam, India, Pakistan, Indonesia and other countries to sign contracts to purchase 2020/21 US cotton at high prices as soon as possible. </p
