According to feedback from cotton trading companies in Zhangjiagang, Qingdao and other places, as the main ICE cotton futures contract strongly approached the 120 cent mark on Monday, setting a new high in ten years, not only US cotton, Brazilian cotton, Inquiries/transactions for Indian cotton have significantly decreased, and the decline in bonded cotton stocks in China’s main ports has also significantly converged. However, the basis difference of customs-cleared foreign cotton has remained stable. The increase in Zheng cotton has far lagged behind that of ICE, while shipments have increased slightly.
A cotton company in Huangdao said that due to the seven consecutive rises in ICE futures since October 22, the main contract has been pulled straight up from 106 cents/pound to 120 cents/pound. , not only a large number of ON-CALL point price contracts have been “locked up”, but also the bonded cotton and cargo signed in October are also facing implementation difficulties. The phenomenon of sellers actively negotiating to re-revise the transaction price, delay delivery or even cancel the contract is gradually increasing.
An international cotton trader said that ICE’s three major U.S. stock indexes hit record highs, China’s contract purchase of U.S. cotton in 2021/22 is still strong, and energy and chemicals, and agricultural product futures have risen.” Driven by good news such as “Come Back”, fund squeezes continue. The bottom of ICE’s main contract is expected to stabilize at 120 cents/pound in the short term and continue to march towards 125 cents/pound.
As for the relevant departments’ “adjustment of the sales floor price calculation method for domestically produced cotton released in reserve cotton in 2021”, cotton trading companies generally believe that the impact on foreign cotton sales is relatively limited. On the one hand, Chinese cotton The focus of inquiry/purchase by textile enterprises and traders is on medium and high-quality foreign cotton, which forms a high-low match with the state-owned real estate cotton. The two are not in direct competition; on the other hand, since late October, the cotton market has been “strong externally and weak internally”, and the price difference Continued to narrow, the sales floor price of real estate reserve cotton under the new calculation formula also showed an upward trend. Although it has an impact on the sales of low-grade and low-quality old cotton in the port from 2018 to 2020, it can be digested temporarily due to low inventory and relatively abundant corporate capital flow. </p
