Last week (October 25-29), the international cotton market maintained a strong trend. The main ICE futures December contract closed at 114.85 cents/pound, an increase of 6.59 cents or 6.09% from a week ago.
Since mid-October, ICE cotton futures have maintained a trend of shock and recovery. After falling sharply on October 21, the December contract has risen for six consecutive trading days. On October 29 The settlement price hit a new high in this round of rise, technical graphics continue to maintain an upward trend, and China’s continued active import demand for US cotton is the main reason for the continued rise in cotton prices.
The latest U.S. cotton export weekly report shows that in the week of October 15-21, although U.S. cotton shipments hit an annual low, U.S. cotton contract signings remained high, with China still accounting for half . As of October 21, the contracted volume of U.S. upland cotton this year reached 1.9 million tons, slightly higher than the 1.866 million tons in the same period in the past five years. It has completed 57.2% of the USDA forecast, and the average in the same period in the past five years was 57.7%.
As of now, the U.S. cotton harvest in 2021/22 is still significantly behind previous years. In addition, the inventory of the previous year has bottomed out, so forward quotations for new U.S. cotton flowers have been in short supply. At the same time, the problem of U.S. cotton shipments has not been resolved, so the tight supply of U.S. cotton will continue in the short term.
In addition to the United States, tight domestic supply and demand and declining inventories in India have also led to a surge in domestic cotton prices. Last week, a foreign report on “Indian cotton prices soared to a record high” attracted a lot of attention. industry attention. Affected by adverse weather, India’s harvest was delayed this year, and the international shipping crisis prevented cotton mills from importing, forcing them to consume large amounts of domestically produced cotton. As domestic demand increases, India’s cotton supply is stretched thin. On the one hand, this has caused the price of Indian cotton to rise. On the other hand, it has also affected the export supply of Indian cotton, which is good for the international market and US cotton.
The core of this round of rise that started in late September is the explosion of China’s import demand for US cotton. Faced with China’s continued large-scale purchases, speculative bulls have driven up prices frantically. Judging from the results, high prices did not hinder China’s purchasing pace, which gave traders more confidence. Last week, the market also reacted positively to the video call between top leaders of China and the United States.
In November, as the December contract delivery approaches, index fund rollovers and factory price trading will become more active. Delays in the U.S. cotton harvest and low ICE futures warehouse receipts may also trigger short squeezes. If the market price continues to strengthen, the ON-CALL contract of the December contract may be transferred to the March contract, paving the way for the next stage of price point. </p
