In just two trading days, the main ICE cotton futures contract rebounded strongly from a low of 115.86 cents/pound, breaking through 120 cents/pound, 122 cents/pound and other integer marks, pulling the market oscillations away. Back to 120-125 cents/pound, some cotton textile companies, traders and other buyers are annoyed by the short market; while a large number of ON-CALL price contract transactions have cooled down rapidly with the strong rise of ICE futures.
An international cotton merchant said that since March 1, no matter whether it is foreign cotton cargo, port bonded cotton or customs clearance cotton, the basis difference of US cotton, Brazilian cotton, Indian cotton and so on has not been adjusted, but as the main ICE contract has exceeded 120 US dollars cents/pound (the intraday high of 123.31 cents/pound on March 1). The price trading that had been relatively active in the early stage has subsequently cooled down. Cotton textile companies and traders who hold cotton import quotas within the 1% tariff have a high wait-and-see sentiment. .
On March 1st and 2nd, the quotation price of U.S. cotton EMOT 31-3/31-4 36/37 for March/April/May shipping date was raised to 141.10-143.50 cents/pound; the quotation of Brazilian cotton M 1- for March/April shipping date was 1/8 prices are quoted at 140-142.50 cents/pound. Although they are 5-6 cents/pound higher than those quoted in late February, they are still significantly weaker than the 2-3 cents/pound increase in ICE’s main contract. Export companies and traders The confidence to “get it right in one step” is insufficient, and testing is the main focus. Cotton stocks in China’s main ports continue to fluctuate and decline (especially the lack of bonded US cotton). The intensification of the conflict between Russia and Ukraine has led to the rise of crude oil, agricultural products, metals and other bulk commodities. This has made traders more bullish and reluctant to sell.
A cotton importing company in Qingdao said that when judging the short-term trend of ICE and external spot prices, the following three points need to be paid attention to: First, the Federal Reserve interest rate meeting in March is about to be held, and whether and how much it can raise interest rates has become the key; second, the second Russia-Ukraine war Even if the three negotiations can make progress, the realization of a ceasefire is a prerequisite for solving the problem; third, the conflict between Russia and Ukraine has triggered a sharp rise in the prices of other crops such as wheat, corn, and oilseeds, including the cotton planting area in 2022 in some major cotton producing countries such as the United States and India. Growth may be significantly lower than previously expected.
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