In early trading on March 30, Beijing time, the main contract of ICE cotton futures fell below the strong support level of 50 cents/pound, setting a new low in ten years. The confidence of long funds and speculators further declined, and the panic index continued. Rising (according to CFTC statistics, the net long rate of ICE cotton futures funds has dropped to -8.88% so far).
Analysis of cotton-related companies: First, the global COVID-19 testing capabilities have greatly improved, and the number of confirmed cases has increased sharply, but the “inflection point” of the epidemic is far from coming; second, although the Federal Reserve and the G20 have launched massive rescue plans, Investors in global financial markets, stock and bond markets, and commodity futures markets do not “pay the price” and sentiment continues to decline; third, global cotton consumption will be significantly lower than expected under the impact of the epidemic.
Affected by the plunge of ICE, shipping schedules, spot and bonded cotton, and customs clearance cotton quotations at major ports such as Qingdao, Shanghai, and Zhangjiagang have all been reduced. Compared with Brazilian cotton, Indian cotton, Australian cotton, and West African cotton, etc., and US cotton experienced a slightly larger decline. On the 30th, the quotations of US cotton ME 51-4 (length 37-38, strength 29-31) and EMOT/MOT M 1-5/32 for the March/April shipping date in Qingdao Port were 55.75-56.20 cents/pound and 59.25 respectively. -59.70 cents/pound (the quoted price difference is slightly larger due to differences in horse value, impurities and other specific batch labels, processing dates, and origins); while in 2019/20, Brazil M 1-5/32 (strong 28), The spot quotations of Indian cotton M 1-5/32 are 60.20-60.60 cents/pound and 60-60.10 cents/pound respectively, with a price difference of 4-4.5 cents/pound compared with the same quality US cotton ME.
Several traders said that although the quotations of bonded cotton and customs-cleared cotton have fluctuated significantly with the internal and external market since late March (the internal market quotation is CF2005 + basis), domestic cotton textile enterprises, middlemen inquiries and Interest in getting goods is still very low; a medium-sized import company in Qingdao even reported that no US cotton, Indian cotton or better-quality Brazilian cotton was shipped last week, leaving many small businesses with nothing to do. Due to factors such as the large number of cancellations or delayed delivery of direct and indirect export orders for textile and clothing in March/April, the near-interruption of trade, transportation and exchanges under the epidemic, the passive depreciation of the RMB, and other factors, domestic cotton-consuming companies are in a “slump” mood. powerful. An international cotton merchant estimates that since mid-to-late March, cotton bonded + non-bonded stocks in major ports in China have continued to grow, with the total expected to exceed 600,000 tons. Importing companies and middlemen are under great pressure. </p
