Since May 7, ICE cotton futures have experienced “three consecutive declines”, with the main contract breaking through 90 cents/pound and 88 cents/pound (the 87 cents/pound mark was almost opened during the session on May 10). Since May, bulls and funds have not only failed to try the early high of 91.66 cents/pound, but also failed to hold the support level of 90 cents/pound. Although the overall market is still in the range of 87-92 cents/pound The overall situation is consolidating, but the bears have a certain upper hand and initiative.
An international cotton merchant believes that it is still difficult for the main ICE contract to effectively break through and stabilize at 90 cents/pound in the short term, and the long and short sides will be in the range of 85-90 cents/pound. The stalemate and game have begun again, but in the medium and long term, below 88 cents/pound is the opportunity for cotton textile companies and traders to enter the market and purchase.
At present, the main factors that suppress ICE’s bottoming out can be summarized as follows: First, as India, Pakistan and Southeast Asian countries have adopted blockade measures to deal with the new crown epidemic, cotton procurement, Consumer demand has declined rapidly, and the situation of global cotton supply exceeding demand has become increasingly prominent; secondly, due to widespread rainfall in Texas this weekend, the weather in other cotton areas is suitable, U.S. cotton planting progress has accelerated, and fund speculation themes have disappeared; thirdly, due to recent Chicago The poor performance of grains put pressure on ICE’s market. On May 10, corn, wheat and soybean futures prices on the Chicago Board of Trade fell across the board. As of the close, the July corn contract fell by 2.8%; the July wheat contract fell by 4.1%; the July soybean contract fell by 0.14%.
Despite this, the author judges that ICE will still “explore the bottom and find the high” at 85-90 cents/pound in the short term. Bulls will once again gain momentum and wait for a rebound, with the midline rising again. 90 cents/pound, the trend of testing 91.66 cents/pound and 95 cents/pound has not changed. When trading high, you need to be cautious when chasing short positions to prevent being trapped. On the one hand, the “helicopter money” model of the Federal Reserve and the US government continues to strengthen, and the pressure of global commodity inflation has become increasingly prominent. Following the US$1.9 trillion rescue plan at the beginning of the year, the Biden administration has introduced a US$2.3 trillion infrastructure plan. The prices of everything on the U.S. consumer side are increasing; on the other hand, India’s cotton planting in 2021 will be greatly affected by the raging epidemic. Coupled with the recent continuous rains in Australia’s main cotton-producing areas, which have intensified concerns about the decline in lint grade and quality, U.S. cotton exports are expected to maintain rapid growth; furthermore, as the economies of Europe and the United States and other countries accelerate their economic recovery and the weather conditions are not ideal, global agricultural products (Especially for grain) prices will continue to be on an upward path, and short-term corrections will not affect the trend. Due to reduced global supply and strong demand, the prices of corn, wheat, soybeans and other grains in the international market have continued to rise in the past month or so, reaching an eight-year high. Among them, corn has risen the most fiercely, rising by more than 50% this year. Considering that the new crown epidemic is raging in Southeast Asia, the Americas, Africa, and Europe, the rise in prices of grain and other agricultural products is far from over. </p
