On November 20, the ICE front-month contract fell below the 63-66 cents/pound box that had been consolidating for several weeks (down to 62.23 cents/pound). The main March contract fell more than 100 points, barely closing at Above the 64 cents/pound mark. Judging from the technical graphics, ICE is showing a downward trend. If there is no short-term support from fundamentals, news and funds, the probability of the front-month contract breaking 62 cents/list and 60 cents/pound will increase.
Some international cotton merchants and importing companies said that the recent Indian cotton quotations have been driven by the depreciation of the rupee against the US dollar and the reduction of the basis difference between ginners and exporters. Inquiries and contracts for spot and far-month shipping dates have It has just turned warm, but the sharp correction of ICE has caused the spot quotations of US cotton, Brazilian cotton, West African cotton, Central Asian cotton and so on to fall accordingly in 2019/20. Indian cotton’s attempt to seize the export market may fail. As ICE’s main force returns to test pressure levels such as 64 cents/pound and 62 cents/pound, some ON-CALL point price contracts are expected to be released, which will help ICE contracts bottom out and rebound in November/December.
Industry analysis shows that the reason for ICE’s breakthrough and decline is that both the external and internal situations have undergone major changes: First, expectations that China-US trade negotiations will break the deadlock in the short term have weakened, and the probability that the US will raise tariffs on US$300 billion worth of goods imported from China on December 15 has increased. Not only does the United States still insist on signing an agreement first before negotiating to reduce or cancel additional tariffs, but the U.S. Senate passed the so-called “Hong Kong Human Rights and Democracy Act of 2019” to grossly interfere in China’s internal affairs, leading to an escalation of Sino-U.S. conflict and narrowing the space for trade negotiations; 2. It is the unclear prospects of Sino-US trade negotiations that have weakened China’s expectations for large-scale imports of US cotton; third, risks such as global economic recession and intensified geopolitical conflicts continue to rise. Tariff barriers manipulated by developed countries such as the United States have slowed global trade and raised the risk of recession for some economies. As long as these tariffs are not removed, they will continue to be a drag on global economic growth. </p
