After the market trend of Zhengzhou futures drew a big “V” on April 22, ICE cotton futures also stopped falling and rebounded. The main contract broke through 55 cents/pound, 56 cents/pound, and 57 cents in a row. The strength and intensity of integer points such as cents/pounds caught short sellers off guard.
Some institutions and cotton-related companies believe that from a technical perspective and market sentiment, ICE has a tendency to continue to approach and regain 60 cents/pound. Although the industry generally believes that the bottom of ICE has ended, it will repeatedly test upwards with the support of 50 cents/pound, and gradually stand above 55 cents/pound and 60 cents/pound in April and May; but global consumption has fallen off a cliff. Under the premise that the inflection point of the COVID-19 epidemic is not yet obvious, and there are still many concerns about the restart of the economy, trade, and transportation, ICE suddenly “derailed” and rose, which was somewhat unexpected.
Why did ICE drop “three levels” of 55-57 cents/pound in a row? The author’s opinion is that there are market rumors that China may increase its imports of US cotton. The other three factors that have contributed to the sharp rebound in ICE cannot be underestimated:
First, as China takes the lead in emerging from the shadow of the COVID-19 epidemic and the U.S. government announces a three-step plan to gradually restart the U.S. economy, China The first phase of the U.S. trade agreement will be accelerated and fully implemented, and China’s contract to purchase U.S. agricultural products will enter the “fast lane” (including 2019/20 U.S. cotton);
Second, crude oil futures are completing the murder of bulls Then it rebounded strongly, stimulating the rise of ICE futures. On April 22 (Wednesday), WTI crude oil futures closed up 22.99% at $14.23/barrel, recovering from their lows. Brent crude oil closed up 5.67% at US$24.43 per barrel;
Third, the epidemic situation in European and American countries has entered a plateau period, and the “eye of the storm” has gone away. In May, economic activities will be gradually resumed, social life and social life will be restarted. order, global cotton consumption is expected to usher in a “stop of wind and rain, and a bright future”. Of course, since March, Chinese companies have accelerated their resumption of work and production, and the rising demand for cotton is also an important reason for the increase in domestic and foreign cotton futures. </p
