China Cotton Network News: According to CFTC statistics, as of June 10, 2022, there are only 18,865 ON-Call contracts left in the 2021/22 ICE futures market, a significant decrease of 16,864 contracts from May 27, a decrease of 47.2%. In just two weeks, the ON-CALL point price contract plummeted by nearly 50%, which is not a big deal.
According to industry analysis, on the one hand, from the end of May to mid-June, the ICE front-month contract not only broke through 140 cents/pound and 135 cents/pound (the intraday low of 134.12 cents/pound), but also consolidated at low levels for a relatively long time. This triggered a large number of ON-CALL contract transactions by buyers; on the other hand, in June, the main ICE futures contract was adjusted from July to December. Taking into account issues such as new and old warehouse receipts, warehouse transfers, and commodity inspections, buyers and sellers negotiated or accelerated price points. Conclude or cancel the contract (some buyers need to pay a fee as compensation for breach of contract). Judging from positions and trading volume, the current stalemate and competition between long and short parties has shifted to 2022/23.
Judging from the weekly report released by the USDA, although in the week of June 3-9, 2022, the net contract volume of U.S. upland cotton in the 2021/22 year was only 6,010 tons, a 90% decrease from the previous week, a new annual low, but in the 2022/23 U.S. The net export contract volume of upland cotton was 86,200 tons, which was a sharp increase from the weekly contract volume in April/May. Among them, China’s net contract contract was 82,500 tons, accounting for 95.7% of the total US cotton contract volume that week.
According to industry analysis, in early June, the main ICE contract price once fell below 118 cents/pound and 115 cents/pound (the intraday low was 114.92 cents/pound), falling into the psychological range preset by Chinese purchasing companies; in addition, Due to concerns about drought in Texas, insect infestations, and continued high temperatures in the central-south/southeast cotton areas; coupled with the risk of economic recession, the Federal Reserve’s aggressive interest rate hike in September may be significantly weakened. Therefore, Chinese buyers took advantage of the dip and signed a large number of contracts for 2022. /23rd new cotton.
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