Since September, ICE cotton futures have started a “roller coaster” rhythm. The main December contract plunged from the annual high of 90 cents/pound to 85.16 cents/pound before rebounding in shock. It is worth noting that in recent days, the southwestern cotton region of the United States has finally received rain, and the drought and moisture conditions have been alleviated to a certain extent. The harvest in the central and southern cotton regions has accelerated after the weekend rains and the weather has cleared, and the 2023/24 US cotton is expected to be launched in advance. . According to the USDA Growth Weekly Report, although the rate of good and good quality in Texas continues to decline month-on-month, the picking progress is at the leading level in recent years. In addition, the listing/sales of Australian cotton and Brazilian cotton in 2022/23 are in full swing, and the shipment and bonded volumes have increased significantly. Therefore, ICE rebound may encounter resistance.
Judging from recent surveys of some international cotton merchants and traders, the mainstream view is that the main ICE contract will break through 90 cents/pound, and the long and short sides will return to a stalemate and back-and-forth between 90 and 100 cents/pound. The view can be Briefly summarize the following points:
First, the probability that the Federal Reserve will press the “pause button” on interest rate hikes in September is almost 100%, which will be good for global stock markets and commodity futures markets; second, long funds have continued to enter the market recently, and the possibility of a squeeze in the market cannot be ruled out. According to CFTC statistics, from August 31st to September 5th, the total positions of ICE cotton futures increased by 12,958 contracts, the net long positions of index funds increased by 2,173 contracts, and the fund’s long position rate increased sharply by 4.62 percentage points. The duel between the fund and the cotton fund was presented. The third is that rainfall in the southwestern and western cotton regions of the United States has very limited benefits for cotton growth and high-quality rates. The expectations of “three drops” in U.S. cotton yield, total output, and quality indicators in 2023/24 are still very strong; fourth, the Since early September, China’s 750,000 tons of cotton import quotas with sliding tariffs have been successively issued to cotton textile companies (not restricted by trade methods). Considering that the price difference between domestic and foreign cotton under the current sliding tariffs is still 700-800 yuan/ton and sliding tariffs The tax quota is valid until December 31, so China’s cotton import volume will rebound rapidly from September to December, supporting the high operation of ICE.
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