According to CFTC statistics, since mid-June, as the main contract of ICE cotton futures has continued to fall, not only the ON-CALL point price contract for 2021/22 has been significantly reduced, but the number of ON-CALL contracts for 2022/23 has also fluctuated downwards. Cotton textile Enterprises and intermediaries seized the opportunity to bargain for low prices, and some enterprises achieved the goal of “escape from all the dangers.”
An international cotton trader said that the rapid “ebb” of a large number of ON-CALL point price contracts on the ICE futures market is that the main ICE futures December contract fell from 133.79 cents/pound to 91.20 cents/pound, which gave buyers an opening. Opportunities for price-pointing to escape; on the other hand, a large number of ON-CALL price-pointing contracts that delay price-pointing, delay performance or even default in the early stage are negotiated by the buyer and the seller, and the final contract is redeemed by the seller (the buyer gives the seller a certain amount of compensation ), the agreement is terminated.
According to CFTC statistics, as of June 28, 2022, the long ratio of ICE futures funds was +25.66%, a decrease of 5.22 percentage points from June 21, which is not small. Against the external background of the Federal Reserve continuing to aggressively raise interest rates in July, the U.S. economy facing the risk of recession, the overall softening of the bulk high-end commodity market, and the overall intensification of confrontation between Russia and Ukraine, Russia and NATO, etc., coupled with the decline in global cotton consumption demand from China It is still expected to spread to Southeast Asian countries such as India and Pakistan, and the cotton planting area in the United States and India will increase significantly in 2022. Therefore, bulls continue to close their positions and flee, and the “air force” has gained a certain upper hand.
Several cotton-related companies in Jiangsu, Shandong and other places have judged that the short-term and long-short sides will compete around the 95 cents/pound mark, and there is a high probability of a phased fall back to 90-95 cents/pound. Therefore, the operation will be based on Focus on buying at low prices and do not miss out on market opportunities. The continued high temperature and drought in the cotton areas of the western and southwestern United States and the strong contracted exports of US cotton in 2022/23 will become an important driving force for the stabilization and rebound of ICE.
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