On January 14, ICE cotton futures continued to rebound strongly. The main contract not only reached a high of 118.50 cents/pound again, but also hit a new high of 119.90 cents/pound in the past 11 years. The resistance level of 120 cents/pound is about to be lost. Judging from the market sentiment and spot market performance, 120 cents/pound may be just the second target of the fund (the first target is 115 cents/pound), and 120-125 cents/pound may become a stalemate and game between short-term long and short parties. ’s car body, the high point in 11 years may be constantly refreshed.
Some institutions and cotton traders believe that the release of USDA’s latest monthly report is positive, that contracted exports of U.S. cotton for the 2021/22 season have rebounded sharply since January, and that most cotton areas such as the southwest/west of the United States have been plagued by drought and high temperatures in the past two months. Fundamentals such as the industry’s concerns about the growth of U.S. cotton planting area in 2022 are only the “trigger” for this round of ICE rises, while crude oil and peripheral commodity futures are rising one after another, the three major U.S. stock indexes have repeatedly hit record highs, and global inflation is at the highest level. Remaining high prices, persistent supply chain bottlenecks, and labor shortages are the keys to ICE’s main contract holding at 115 cents/lb and attacking 120 cents/lb.
According to feedback from cotton trading companies in Qingdao, Zhangjiagang and other places, although ICE cotton futures rose sharply last weekend, most of the cotton basis quoted by foreign merchants and traders in US dollars such as far-month shipments and spot prices has not been adjusted in the past two days. Not only ON-CALL Point-price contracts cannot be effectively concluded and executed, and spot inquiries and shipments are also relatively deserted (including bonded cotton). The entire imported cotton market is in a state of low prices and low market prices.
Industry analysis shows that in addition to the sharp increase in ICE, which has caused foreign cotton quotations to exceed the expectations of cotton textile companies and middlemen, there are also the following four factors that restrict Chinese buyers from placing orders for U.S. cotton: First, although the signed export progress of U.S. cotton in 2021/22 is very slow is fast, but the shipment progress lags behind significantly; secondly, purchasing companies are not optimistic about the performance of the ICE cotton market after the Federal Reserve accelerates its exit from QE and raises interest rates in March; thirdly, the current cotton import quota within the 1% tariff in 2022 has not yet been issued to textile companies In the hands of cotton import companies, there are very few transparent quotas; fourth, as of mid-January, the sales progress of Xinjiang cotton in 2021/22 is less than 15%, indicating that domestic cotton supply is relatively sufficient this year, and structural gaps may be difficult to appear.
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