Since April 14, the main contract of ICE cotton futures has continued to consolidate in a narrow box of 85-88 cents/pound, and the bottom center of gravity has continued to move slightly upward (the intraday high of the July contract on April 22 was 87.24 cents/pound , a new high in the past month), the long and short stalemate, and the gaming range has risen to 85-90 cents/pound.
Although due to the lackluster U.S. cotton contract export data in the week of April 9 to April 15, 2021, the U.S. dollar index bucked the trend and rose (the U.S. stock market opened lower, and U.S. Treasury bond yields rebounded, etc., supported the U.S. dollar) Waiting for the negative impact, ICE showed “open high and move low” on the 14th, and closed slightly lower in late trading. However, judging from the spot market sentiment and ICE disk atmosphere, the long and short forces are basically in a weak balance state. Europe, India, the United States, and Brazil The resurgence of the COVID-19 epidemic in other countries, mixed economic data in the United States, and the suppression of the recovery momentum of global cotton consumption are still important reasons why bulls and funds enter the market cautiously and dare not make efforts to increase the ICE market.
The author judges that the main ICE contract will enter the upward channel again after a short period of 85-88 cents/pound oscillation and accumulation, and it is “imminent” to break through 88 cents/pound and 90 cents/pound. , but it is difficult to retest this year’s 96.22 cents/pound in the medium and long term, and oscillation upward is the main tone of ICE cotton futures. The reasons can be simply summarized as follows:
First, the U.S. dollar index is likely to fall further, and commodity futures are “easy to rise but difficult to fall.” The continued outbreak of the epidemic in Europe, the United States, India and other countries, as well as the performance of global stock markets, have provided some support for safe-haven demand for the U.S. dollar; furthermore, the recent decline in U.S. Treasury yields and the U.S. dollar index indicates that the Federal Reserve will tighten more slowly than the market expected. ;
The second is that the fundamentals of U.S. cotton are “more than empty”. On the one hand, although U.S. cotton in 2020/21 has been oversold, Vietnam, Pakistan, Turkey and other countries are still actively signing contracts for U.S. cotton; according to the first phase of the Sino-U.S. trade agreement, although Chinese purchases may be postponed or postponed , but there is a high probability that imports will be launched in the second half of 2021; on the other hand, West Texas, the main cotton-producing area in the United States, continues to be dry and is experiencing cooling, and the abandonment rate may be significantly higher than in previous years. Coupled with the southeastern cotton areas, Due to the influence of precipitation and cooling in the central and southern cotton areas, weather factors are likely to become the focus of fund attention and speculation in the near future;
Third, there are recent market rumors about additional issuance quotas, but the author believes that the current domestic cotton supply is sufficient, Zheng Cotton CF2109 The contract price is lower than 16,000 yuan/ton and textile companies have reported that medium and long-term orders are not ideal, so the market needs to be treated calmly. </p
