Since mid-July, ICE cotton futures have continued to oscillate and rebound. The bottom of the main contract reached 87.96 cents/pound, 88.88 cents/pound, and 91.80 cents/pound. The intraday high reached 96.71 cents/pound (brush out A new high since 2013); this week saw “four consecutive positives”, with the December contract once again approaching 95 cents/pound.
Some international cotton merchants and cotton traders believe that in September/October, the weather in various cotton regions in the northern hemisphere will be changeable and external news interference will increase; in addition, USDA will once again adjust U.S. cotton production and ending stocks are expected to rise. , so the ICE oscillation amplitude may widen, but the trend of the bottom of each ICE contract slowly moving up has not changed; once the fundamentals, policies, and external commodities rise, ICE’s main force may try 100 cents/pound.
Why is there a high probability of ICE consolidating upward in the short term? The author’s views are briefly summarized as follows: First, the market’s confidence in the Fed’s policy adjustments is declining. Affected by the surge in cases caused by the Delta variant strain, the U.S. retail sales data in July that unexpectedly fell short of expectations, and the U.S. PMI falling to the lowest value in eight months, Federal Reserve Chairman Powell is expected to press the “pause button” on the plan to reduce the scale of debt construction; Second, the Biden administration’s “helicopter money” measures to stimulate the economy are still increasing. Recently, the U.S. House of Representatives passed a $3.5 trillion infrastructure budget resolution framework by a slim margin of 220:212, paving the way for the Senate to implement the budget coordination process to complete the legislation. At the same time, the House of Representatives is also pushing for a vote on a bipartisan proposal of approximately US$1 trillion by September 27 at the latest; third, as usual, major cotton-producing areas in the United States will usher in frequent hurricanes and tropical storms in August and September. The storm has hit, and the current budding rate, boll-setting progress, and catdding progress of US cotton are still significantly lagging behind, and the conditions for bullish speculation to squeeze out the shorts exist; fourth, as Chinese buyers “return” in the new year, they sign large-scale purchases of 2021/ In the 2022 U.S. cotton season, this year’s U.S. cotton signings will “go faster and faster,” stimulating the ICE market to oscillate upward. </p
