In the first week of November, ICE cotton futures hit a new high again. The settlement price of the December contract once exceeded the 120 cent mark, and then fell back and stabilized. As of November 5, the December contract closed at 117.19 cents, up 2.34 cents, or 2.04%.
The continuous rise in ICE futures in the previous week has suppressed demand. Last week’s U.S. cotton export weekly report showed that in the week ending October 28, the U.S. 2021/22 land The cotton contract volume was 31,500 tons, down 61% from the previous week and 51% from the average of the previous four weeks. China’s contract volume decreased to 10,000 tons. So far, U.S. cotton exports in 2021/22 have reached 8.509 million bales, which is lower than the 8.86 million bales in the same period last year, but higher than the 8.342 million bales in the same period of the past five years, completing 58.1% of the USDA export forecast, slightly lower than the 8.342 million bales in the same period of the past five years. The average for the same period last year was 58.4%.
An important reason for the reduction in China’s contract volume for US cotton is that the price difference between China and the international market has narrowed significantly. Since late October, Zheng cotton futures have been hovering around 21,500 yuan/ton (discounted 150-155 cents/pound), while ICE futures have risen sharply during the same period. The price difference between Zheng cotton and ICE cotton futures has narrowed from about 46 cents to Currently 36 cents. With the regulation of relevant domestic departments, the hype of Zheng cotton futures has gradually faded, and the possibility of another sharp rise in prices has been significantly reduced. Whether it is the excessively high external price or the gradually narrowing price difference between domestic and foreign prices, China will slow down the pace of signing US cotton, which will cause certain suppression on further sharp rises in the external market.
The spot supply of US cotton has been extremely short this year, and textile mills in urgent need of replenishment can still only buy cotton to pay for inflation. Khmer price. However, the current global high inflation has made energy and food extremely expensive. Faced with the sharp increase in the prices of these two urgently needed items, there is still a question mark whether end consumers can accept the rising cotton prices. For external prices to continue to break upward, new and more convincing bullish signals from cotton fundamentals are needed.
This week’s USDA supply and demand forecast will bring the latest guidance on fundamentals. This year, the United States, India, Pakistan, Brazil, Australia and other countries have generally increased production. The market expects that U.S. and global production data may be further increased, while rising prices and supply disruptions will lead to reduced factory consumption. Regarding U.S. cotton production, some growers from Texas to the southeast of the United States expect the output to be considerable. Therefore, U.S. cotton production may have more room to increase. The specific extent remains to be seen, but the market generally believes that the production will increase between 1850 and 1900. Between ten thousand packages. </p
