Since May 13, ICE cotton futures have been oscillating and diving, with the July contract breaking through 87 cents/pound and 85 cents/pound in succession, with the intraday low reaching 82 cents/pound. ICE fell in a week 7.74 cents/pound, a decrease of 8.62%.
Although ICE triggered a certain amount of buying after falling below 85 cents/pound, the drought in Texas is still severe, and floods occur frequently in the central and southern cotton areas, the progress of US cotton planting is lagging behind significantly. Last year, and the Biden administration is still making every effort to promote the implementation of the US$2.3 trillion infrastructure plan, but the ICE market does not seem to buy it, and the long and short sides continue to fight and stalemate in the narrow range of 82-85 cents/pound.
Some institutions and cotton-related companies judge that the main short-term contract will be “climbing high and bottoming” at 80-85 cents/pound, and the focus will return to 87 cents/pound. Pounds or even 90 cents/pound will encounter crazy resistance from short sellers, and each upward step will have to pay a relatively large price.
Judging from the performance of ICE yesterday, although stocks, bonds, cryptocurrencies, commodities, etc. plummeted across the board, the Zheng Cotton CF2109 contract once fell below the key support level of 15,500 yuan/ton. However, ICE futures have shown relatively strong resilience, with the main contract stubbornly holding the “warning line” of 82 cents/pound, retaining hope for a rebound in May/June.
An international cotton trader said that the factor that caused ICE prices to exceed 85 cents/pound was not from the fundamentals of global and U.S. cotton supply and demand, but from external policy interference, mainly the frequent interference by the State Council. The price increase of named commodities will cool down the pressure of imported inflation. At the same time, we will strengthen market supervision and crack down on malicious speculation, hoarding and other illegal activities. Against this backdrop, ICE futures are likely to remain range bound. </p
