Fabric Products,Fabric Information,Fabric Factories,Fabric Suppliers Fabric News Crude oil fell into negative territory, why did ICE rise instead of falling?

Crude oil fell into negative territory, why did ICE rise instead of falling?



On April 20, a miracle occurred in human history! The U.S. crude oil 2005 contract unexpectedly fell into negative territory, reaching an intraday low of -$40.31/barrel (a price plunge of more than 300% from th…

On April 20, a miracle occurred in human history! The U.S. crude oil 2005 contract unexpectedly fell into negative territory, reaching an intraday low of -$40.31/barrel (a price plunge of more than 300% from the previous day). Since the Chicago Exchange completed the oil 0 price and negative price test a few days ago, the exchange system turned on the negative price “switch” for trading contracts, so all CME’s trading and clearing systems will continue to operate normally. Affected by the collapse of crude oil, the financial market, US stocks and most commodity futures responded with declines. On April 21, the domestic stock market and futures such as PTA, black series and Shanghai copper mainly opened low and turned green.

However, on the 20th, ICE cotton futures unexpectedly withstood the pressure from external markets such as finance and commodities. Not only did they not follow the trend, but they closed with a sharp rise. The main contract once stood at 54 cents. / pound, which impressed investors and institutions.

Some cotton-related companies and investment banks believe that the bottom of ICE has been established at 48.15 cents/pound, and will still be gaining momentum in the short term at 50-55 cents/pound, waiting for the opportunity and signal of breakthrough, and it is easy to rise. Difficulty falling will be an important feature of the trend of ICE in April; while the center of gravity of the main contract in May will move up to 55-60 cents/pound (it is a high probability event to stand above 60 cents/pound in stages), textile factories, middlemen Merchants must step into the market and strive for low prices below 55 cents/pound.

Why are you optimistic about the rebound of ICE cotton futures when crude oil plummets? The author’s views are summarized as follows:

First, as the growth momentum of the COVID-19 epidemic has been contained and an inflection point has begun to emerge, developed countries such as Europe and the United States have begun to unlock the economy, traders, transportation, exchanges, etc., have gradually recovered. Last Friday morning, Beijing time, Trump announced guidelines for restarting the U.S. economy; subsequently, Georgia, Tennessee, South Carolina, Texas and other states pressed the “start button” on their economies; Spain, Italy, France, Germany and other states successively reported epidemics At the turning point, we are exploring the relaxation of restrictive measures. May is expected to usher in a complete unblocking, and cotton exports, cotton consumption, textile and clothing imports, etc. are back on track;

Second, the outbreak of the new crown epidemic has wreaked havoc on the United States, India, and Pakistan. Even in countries such as Africa, the cotton planting area in 2020 will have a relatively large impact. Judging from the survey, due to various reasons such as backward medical infrastructure and insufficient testing and treatment capabilities, Southeast Asian countries such as India and Pakistan and Africa are likely to become the next “epicenter” of the new crown epidemic. The current lockdown in India has been extended to May 3 The two major cotton-producing areas of Japan and Pakistan, Sindh and Punjab, have implemented city closures. Therefore, farmers’ preparation for farming, procurement and transportation of agricultural materials have been greatly restricted;

The third is the global “grain and cotton competition” in 2020. The phenomenon of “land” will become more and more prominent, and the cotton planting area and supply capacity may be significantly lower than expected. As the COVID-19 epidemic continues to spread, at least 13 countries have taken measures to restrict exports to ensure domestic food supply; coupled with floods + droughts + locust plagues + epidemics this year, Africa is facing dual food and economic challenges, and cotton prices continue to rise. It is almost a foregone conclusion that farmers will “vote with their feet” when planting. </p

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Author: clsrich

 
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