ICE Cotton Futures Further Down 300 Points, Cotton Enterprises Chasing Empty Should Be Cautious

In June 7th, ICE cotton futures showed a sharp decline. In July, the contract reached a low of 65.59 cents, down 300 points, while the main contract in December broke the low level of 65.25 (low 65.26), and cotton growers, cotton exporters, traders and bulls had just recovered and restored confidence, and the road of ICE rebound was extremely difficult.

Analysis of the industry, first, the United States cotton to accelerate the sowing and the first few weeks 2018/19 cotton export contract is not to force the superposition.

Rainfall and cotton production in the main areas of the better weather, nearly two weeks of cotton planting overall speed up, a large trend after the last year (the United States cotton sowing schedule of 71%, only 3 percentage points lower than the same period last year); May 2019 24-30, 2018/19 signed and shipped volume ring ratio decreased by 37% and 56%; two is the 2019 cotton and Brazil cotton pre-sale window fully opened, attracting the attention and attention of the global buyers, 2018/19 year cotton quilt "hang" side; three is the United States to China, the European Union, Mexico, Canada and other countries "start" trade war, triggering the global recession, cotton consumption cliff clipping decline.

Although the pressure on cotton is significantly higher than that of corn, soybeans, red dates and other crops from the basic and external markets, the author still thinks that the risk of ICE catching up and killing is relatively large. The contract will be repeated in July in the 65-70 compartment, and cotton and investment enterprises are only suitable for band operation.

Why should we be cautious in pursuing empty space?

On the one hand, the Fed's interest rate cut is expected to rise sharply.

In May, the number of new non farm employment data in the United States was 75 thousand, compared with the 263 thousand new non farm employment figures in April.

The federal reserve fund interest rate futures show that the probability of the US Federal Reserve cut interest rate in July is as high as 85.2%, which is almost certain that the Federal Reserve will cut interest rates in July.

The only uncertainty is the way to cut interest rates.

In July, did the Federal Reserve cut interest rates by 50 basis points, or cut interest rates two times or 25 basis points?

Before, New Zealand, Australia, India and other central banks have taken interest rate cuts to stimulate the economy; on the other hand, Sino US, US, European and US Mexico trade negotiations are expected to have a favorable turn, not to the brink of collapse.

According to foreign media reports, the US finance minister said that the leaders of the United States and China will meet at the G20 summit in Osaka to further discuss the issue of trade between the United States and China and expect 90% opportunities to reach a trade agreement. Before that, in June 7th, US President Trump announced an agreement with Mexico to suspend tariffs on all goods in Mexico. Trade negotiations between the United States and Europe are also in full swing.

Therefore, the author estimates that the risk of ICE overlooking empty pursuit is mainly from the periphery, rather than the supply and demand, weather and other basic aspects.