ICE Cotton Futures Rebound To Defend The 65 Pass Or Just A Flash In The Pan.

In May 14th, ICE cotton futures hit a new low of 64.50 in the intraday market, but at the end of the day it rose more than 100 points. The market saw a trace of a long red color on a miserable green disk in May. Finally, the fund and the Bulls spent a great deal of strength to support the 65 cents / pound.

According to the analysis of the industry, 14 reasons for the ICE rebound are as follows: the US stocks rebounded all the way, the S & P 500 increased by 0.8%, the Dow rose 0.82%, the largest single day increase in the last month, and the index rose 1.14%. Two, the main part of the cotton producing area in the United States experienced a continuous heavy rain, and the progress of planting was significantly lower than the 8 percentage points in the same period in 2018. Investors and traders were worried about the abandonment of American cotton and the improvement of other crops. Three was the ICE crash, which led to the purchase of other buyers from other countries except China (India cotton and Australia cotton "low cost performance"), especially some ON-CALL spot prices were growing rapidly.

However, I do not think that ICE already has the conditions of stabilizing, bottoming and rebounding. The 14 day's "red plate" closing market is just a flash in the pan, because compared with the macro and peripheral markets, cotton supply and demand, weather and many other fundamental effects are the cotton price trend in the medium and long term or even the whole year. Short-term events, funds, and mood of the stock market have triggered oversold and oversold prices.

The reasons are briefly summarized as follows:

First of all, the Sino US trade talks are "getting away from each other" and the difficulty of reaching agreement is increasing.

Following the tariff increase of $200 billion imported from China in May 10th to 25%, in May 13th, the United States Trade Representative Office (USTR) released a tax increase list of the highest 25% tariff for China's 325 billion dollars worth of goods exported to the United States on the 13 day, which covered almost all goods that had not been previously added to tariffs, and held a public hearing in June 17th. The Ministry of Commerce of China also responded positively and announced the Counter-measures in a timely manner. Therefore, it is foreseeable that the Sino US trade consultation will continue to "talk about each other and not give in to each other". The news will also be repeatedly switched in good and bad space. Once the two sides are confirmed to have collapsed or temporarily canceled consultations, the impact and suppression of the "ICE" and other "wind vane" will be very prominent.

Secondly, the instability in the Middle East is rising sharply, and the sharp rise in crude oil will hit the global economy.

On the 14 day, the price of Brent crude oil increased by about 1.5%, which has already surpassed 71 US dollars, and WTI crude oil rose 1% to 61.72 US dollars. Under the deterrence of the three major carriers of the United States, the more than 250 fighters, the B-52 bombers and the Patriot missiles, the US and Iraq were close to the outbreak of the critical point of the heat war. Once the force of Iran locked the Strait of Hormuz, the global crude oil supply of nearly 1/3 will be seriously affected, and the price of crude oil will rise sharply and cause inflation all over the world.

Once again, global monetary liquidity is tightening. "Steady" has become the consensus of central banks.

Although the Federal Reserve did not raise interest rates in March and will release the scale in September, the Fed also pushed back the pressure on Trump and the US government to cut interest rates.

Moderate inflation and almost no obvious fiscal imbalances, the lowest unemployment rate in 50 years, will give the fed a boost in interest rates at the end of this year, while the second largest economy has no intention of "sluice gate".

In April 26th, the people's Bank held a teleconference on accounting and financial work in 2019.

The meeting pointed out that at present, the people's Bank of China has carried out the important mission of implementing a prudent monetary policy, supporting the development of the real economy, and preventing and eliminating financial risks. In February 20th, at the executive meeting of the State Council, on the same day, the people's Bank of China reiterated that prudent monetary policy has not changed and will not change.

We resolutely refuse to carry out flood irrigation.