ICE cotton futures and Zheng cotton are currently described as “big bears and bad bears”. They are brothers in distress. The gains since mid-December 2020 have basically been wiped out. The market, the market, cotton-related companies, and investor confidence have been greatly affected. Certain psychological expectations were broken again and again.
As ICE’s main contract continues to fall, the May contract approaches the 80 cents/pound mark, triggering a certain number of ON-CALL point price transactions (U.S. cotton, Brazil Cotton and Indian cotton basis difference has not been adjusted); coupled with the enthusiasm of major textile countries such as Pakistan, Vietnam, Indonesia and China to fully mobilize the enthusiasm for contract procurement, and the severe weather in some cotton areas in the United States that has limited sowing, ICE’s fundamentals are not bad or even good. Conditions for stabilization and rebound. An international cotton trader believes that ICE will repeatedly consolidate and gain momentum in the 80-85 cents/pound range in the short term, waiting for the cooperation of external markets and news, so be cautious when chasing short positions.
Recently, several “black swans” have appeared one after another in the news and market, making speculative institutions and cotton-related companies unable to guard against them. Panic and bulls stepped on each other for a while.
First, the signal sent by the high-level meeting between China and the United States is not positive, the two sides have relatively large differences, and the direction of Sino-US relations in 2021 is full of variables. Although China and the United States had fierce exchanges, bickering, and unwillingness to give in to each other during the talks, judging from the subsequent press conferences of both sides, they both believed that the dialogue was timely and beneficial, and deepened mutual understanding. However, this was full of gunpowder and tough talk. The dialogue still makes all parties concerned about the future warming of Sino-US relations;
Secondly, the third wave of the new crown epidemic broke out in Europe, and the prevention and control situation in many countries is grim. France, Italy, Germany Countries such as China and Hungary have adopted city or regional lockdown measures, casting a shadow over the recovery of the global economy, trade, transportation, exchanges, etc. EU officials stated on March 24 that the current situation of the COVID-19 epidemic in Europe is worsening, and the number of COVID-19 infections, hospitalizations and deaths reported daily in many countries are increasing;
Third, China-EU cooperation has been shaken by the fact that “the EU took the initiative to provoke trouble under the pretext of human rights.” Sudden conflicts have tightened China-EU relations. On March 22, the European Union, the United Kingdom, Canada and the United States each announced unilateral sanctions on relevant individuals and entities in China under the pretext of so-called human rights issues. On the same day, China decided to impose sanctions on 10 individuals and 4 entities from the European side who had seriously damaged China’s sovereignty and interests and maliciously spread lies and false information, demonstrating its resolute attitude in safeguarding sovereignty. After China announced relevant sanctions, the European Parliament canceled a meeting scheduled to discuss the China-EU Investment Agreement on the 23rd in protest. Chinese Foreign Ministry spokesperson Hua Chunying said, “The European side cannot expect to talk about cooperation and gain practical benefits on the one hand, while imposing sanctions and harming China’s rights and interests on the other. This makes no sense and is simply unworkable”;
Fourth, affected by the United States’ “opening the floodgates”, emerging economies are facing great pressure to raise interest rates, and Brazil, Russia, Turkey, etc. have taken the lead in raising interest rates in response. From March 17th to 19th, the central banks of Brazil, Turkey, Russia and other three countries successively announced interest rate hikes, triggering market speculation about a global wave of interest rate hikes. Nigeria and Argentina have indicated that they may raise interest rates as soon as the second quarter; market indicators show that expectations for policy tightening in India, South Korea, Malaysia and Thailand are also increasing. Under the pressure of the proliferation of US dollars, countries have no choice but to act “against the market and against the economy.” </p
