Since August, ICE cotton futures have continued to fluctuate upward, with the main December contract holding firm at 90 cents/pound and then breaking through the integer marks of 91 cents/pound and 92 cents/pound (the intraday high of 92.43 on August 10 cents/pound, setting a new high in 2021/22), and the consolidation range moved up to 90-95 cents/pound (compared to the low of 59.51 cents/pound at the end of July 2020, ICE has risen by a total of 32.92 cents in one year) cents/pound, an increase of 55.32%).
As for the reason why ICE closed sharply on August 10, the industry generally believed that it was the result of “positive external stimulation and strong cooperation from fundamentals”. The increase was within expectations, but the increase A bit big and walking a bit fast.
First, on August 10, the U.S. Senate passed a cross-party infrastructure investment bill totaling approximately US$1 trillion, which supported the rebound of financial markets, stock markets and commodity futures. Second, as of mid-August, the growth progress of U.S. cotton lags significantly behind that of previous years (budding, boll setting, and boll opening rates are poor), causing investors to have doubts about the growth rate of U.S. cotton production per unit area and total output in 2021/22. Concerns have increased; third, cotton prices in China, Pakistan, and India are expected to open higher in 2021/22 (all of which show a decline in planting area and a rapid recovery in consumer demand).
It is worth noting that according to CFTC statistics, as of the end of July 2021, there were 130,497 ICE cotton futures ON-CALL contracts, a significant increase of 14,933 contracts from the beginning of July; and with the 8 ICE rebounded strongly in March, and the ON-CALL contract was forced to continue to push back the price. The main contract exceeded 90 cents/pound and 92 cents/pound, and the unpriced contracts were basically locked. Cotton trading companies in Qingdao, Zhangjiagang and other places said that in early and mid-July, they repeatedly urged and required buyers to price below 88 cents/pound in time (the lowest intraday low was below 85 cents/pound), but there are still some buyers. Holding a wait-and-see attitude, hoping that ICE will fall back to 82 cents/pound or even below 80 cents/pound, most buyers currently negotiate with cotton sales companies to postpone price points for 15-30 days or cancel contracts, sellers buy back, etc. Solution (the buyer gives the seller some compensation).
From the survey, cotton-related companies generally believe that buyers such as cotton textile companies and middlemen have not “get on the market” at 85-88 cents/pound, thus missing the point. This round of rebound is a pity; however, when entering the market above 92 cents/pound, I lack confidence and are more cautious. I am worried that I will copy the bottom by copying the top of the market and become a “taker” for traders, which is a dilemma.
Southeast Asia: Raw material stocks are tight and factories are actively purchasing Australian cotton
Exclusive news from China Cotton Network: Recently One week, the trading basis of SM 1-5/32 Australian cotton for August-September shipping in Southeast Asia was 1,200 points, with Indonesia and Vietnam being the main trading locations. The basis for M grade is slightly lower at 50 points, and the basis for SLM grade Australian cotton is 1,000 points.
Currently, international logistics bottlenecks are causing delays in cotton export shipments, resulting in tight inventories in textile mills. Considering that the harvest of Brazilian cotton and US cotton may be delayed, Australian cotton can now fill the gap. This blank. Due to the very tight inventory of raw materials in textile companies, many factories have recently requested direct shipment without transfer to the port to avoid delays as much as possible.
Indonesia has recently purchased more than 400,000 bales of Australian cotton, including Australian cotton in 2021 and 2022. The longest loading period is September 2022. Due to the current shortage of Macau and Brazilian cotton , US cotton prices are close, and Australian cotton sales will continue in the future and occupy the market share of US cotton.
Although Vietnam’s textile factories have closed down due to the epidemic, demand for Australian cotton shipped from August to September is still increasing. Inquiries for Australian cotton have increased in South Asia in recent weeks, with Pakistan’s demand being the most prominent. However, containers are extremely tight at this stage, and cotton merchants are reluctant to sign contracts. </p
