ICE Rise Is Not A "Whim" But "Success".

Since mid February, the ICE cotton futures contracts have entered the rhythm of the rebound and the continuous upward shift of the center of gravity. In May, the contract low was 71.03, the high point was 77.82, or 9.56%, which echoed the fact that the price of the spot market, including the cotton, Brazil cotton, Australia cotton, India cotton, and so on, all matched the increase.

According to quotations from some foreign and import enterprises, in the past month, EMOT/MOT SM, SM 1-1/8 Brazil cotton, SM 1-5/32 cotton and S-6 1-5/32 India cotton quotations rose by 5.5-6 cents / pound, 3.5-4 cents / pound, 3.7-4 cents / pounds and 5.5-6 cents / pounds, respectively, compared with the adjustment range of zhengmian and domestic cotton flower spot.

From Qingdao, Zhangjiagang and other places, in the middle of March, SM 1-5/32 (including a small amount of SM 1-3/16) Australian cotton RMB quoted 17000-17200 yuan / ton, the real paction price was 16800-16900 yuan / ton; the SM 1-1/8 Brazil cotton RMB quoted 15600-15800 yuan / ton, the real paction price was 15600-15700 yuan / ton; S-6 1-5/ 32, J34 quoted price concentrated in 15300-15400 yuan / ton, the real paction was 15300 yuan / ton, the higher the quality and the better spinnability, the greater the quotes of the imported cotton quotes.

On the one hand, the number of bonded and immediate high-quality Australian cotton and Ukrainian cotton is becoming less and less, and the contradiction between supply and demand has deepened. Traders' "waiting for the price to sell" mentality is highlighting; on the other hand, the domestic "double 28/ double 29" and other high quality cotton supply not only quoted prices, but also shifted the focus of the paction price continuously, and the Sino US trade consultation has not yet reached an agreement, and before 2019, the supply and demand gap was enlarged, and the promotion of foreign cotton "easy to rise and difficult to fall" before the news of the cotton spinning wheel was unknown.

From the perspective of ginning mills and cotton trading enterprises, the ICE cotton futures early stage has ended. Market confidence, funds and peripheral markets have opened up a channel for ICE's main contract to rise by 71, and the pattern of oscillation reversal has been formed. Breaking the 78, 80 and so on is close at hand, and tests the probability of 82 and 85 resistance levels.

The trend of "outer strength and internal weakness" of cotton has not changed. The main contract 71-75 box is the opportunity for textile mills and importers to "unlock their hands and feet" to sign up for import (provided that they have their quotas and reduce the possibility of "overdraft" import quotas ahead of time).

If it is "empty", it needs to be absorbed in the 75-80 quarter.

In May, the price of the contract was more than 80, then "watching the dishes and going to the rice" and buying with the purchase did not rise or fall by 0.

Why do we see more ICE and bullish cotton stocks?

The reasons can be summarized as follows: (for reference only):

First, the US monetary policy has undergone a fundamental shift.

The US and global financial markets have been improving in a short period of time, and commodity futures are facing a good opportunity to rebound.

On the 21 th of March, the statement of the Federal Reserve of the Federal Reserve has shifted completely. It can be said that the Fed has completely surrendered, from the Hawks to the super tame doves, which is a historic escape of the US economy.

Not only will it stop raising interest rates in 2019, but it is also expected to stop shrinking in September 2019 (plans to reduce the scale of debt holdings from 30 billion US dollars per month to US $15 billion per month from May and stop the US Treasury bond reduction program in September).

Second, 2018/19 global cotton supply and demand pressure continued to rise, supporting ICE's main contract back to the top 80 pass.

First of all, in response to the "double fall" of cotton production and quality in India and Pakistan this year, Australia's cotton output will decline sharply in 2019 due to weather factors (the Australian cotton production is expected to be 250 Wan Bao in 2018/19), which will aggravate global supply pressure. Secondly, Sino US trade consultation is closer and closer to reaching a consensus and signing agreement. China's massive import of US cotton will stimulate the ICE reversal.

According to the Ministry of Commerce, the US trade delegation will visit China on March 28th -29 for the eighth round of Sino US high-level trade consultation. The Chinese delegation will go to the United States for the ninth round of high-level trade talks between China and the United States in early April.

Trump administration officials say negotiations between China and the United States have reached the final stage, with the goal of reaching agreement by the end of April.

Earlier, the US negotiator said that cotton included in the list of US agricultural products purchased in China, such as rumours that it would be "ICE", and again, in the 3-8 month, there was not much cotton available for export in the US.

According to USDA statistics, in March 14th, the United States signed a total of 2 million 800 thousand and 200 tons of cotton and signed a total of 89% tons (5 years mean 90%). In March 14th, considering the decline of cotton grade and quality this year, the remaining cotton in the United States is difficult to meet the procurement standards of foreign buyers.

Third, entering the 3/4 month, the northern hemisphere cotton will enter the sowing period, and the cotton production area, weather and other hype will arrive as soon as possible.

It is understood that on March 8-15, the general precipitation in the southeastern United States, the delta continued to be stormy and torrential rain, the floods intensified, and field operations could not be carried out.

In the early part of Texas, the temperature dropped to nearly 30 degrees Celsius in the southern part of the world. The western part of Texas still droughts, and snow in the northern part of the country.

Recently, cotton growing in China's Xinjiang cotton region has experienced significant cooling, snowstorm and windy dust weather. Cotton planting in Hotan, Kashi and Akesu is expected to be postponed. However, in another big cotton area, India is sowed late, and the impact of weather, cotton seed and MSP upgrades on cotton planting is hard to judge.

In the past two months, the impact of weather factors on futures can not be underestimated. Frequent low-temperature precipitation in the northern hemisphere is likely to become a booster for ICE's accelerated rebound.