Recently, the main ICE cotton futures contract has continued to consolidate within a narrow box of 58-60 cents/pound. The cotton planting area in the three major cotton-producing countries of the United States, India, and China has gradually settled. The risk of a second outbreak of the new crown epidemic has increased significantly. Economies around the world have bucked the trend and pressed the economic “start button”. The U.S. stock market has “rose more than it fell.” Under the premise of “less” and so on, the ICE market is long and short, the direction is unclear, and the market is in a wait-and-see stage.
According to CFTC statistics, so far, the ICE long rate has rebounded to +3.12%, and there are only 16,325 ON-CAll contracts left in 2019/20, a sharp decrease of 7,046 contracts from June 1, a decrease of 30.15%; indicating that as the ICE futures July contract fell below 60 cents/pound and 59 cents/pound, a certain amount of ON-CALL point price contracts were traded, including buyers from China, Vietnam and other countries purchasing raw materials and replenishing prices in a timely manner. library.
The author analyzes that the factors currently suppressing the rebound of ICE and international cotton spot are as follows:
First, the first wave of the new crown epidemic in Europe and the United States has not yet fundamentally improved; The second wave of the epidemic has broken out. Although judging from expert judgment and sufficient prevention and control experience, the impact on the economy, life, and trade will be lower than that of the first wave, but it is new for the global textile and clothing industry chain and cotton consumption that have just resumed work and production. The pressure;
Second, the short-term bulls and funds’ speculation on the cotton planting area and the weather in the main producing areas in 2020 lacks themes and is powerless. According to the USDA report, as of June 14, the cotton sowing progress in the United States was 89%, an increase of 4 percentage points from the same period last year, and the budding was the same as in previous years, and the seedling situation remained stable; due to the arrival of the southwest monsoon in India as scheduled, the cotton planting progress from June to September With normal rain conditions and the government continuing to raise MSP, India’s cotton planting area is very optimistic in 2020;
Thirdly, in addition to China’s signing of US cotton, which is still “strong”, other major textile countries in Southeast Asia, Turkey and other major textile countries have canceled contracts, The momentum of slowing down procurement is obvious, and US cotton imports have fallen into a “bottleneck” period. With the second outbreak of the epidemic, demand may recover or come to an abrupt end;
Fourthly, the economic situation has deteriorated under the raging epidemic, with layoffs and unemployment increasing, income falling, and textile and clothing consumption willingness to decline significantly. According to statistics, in March, EU clothing imports fell by 21.4% in euros and 23% in U.S. dollars; while U.S. clothing retail consumption fell by 48% year-on-year in April, both significantly exceeding expectations. </p
