The Market Is Full Of Idle ICE Cotton Futures.

In the past week, despite the significant increase in cotton production in the United States and India in 2019/20, the abrupt abandonment of the APEC meeting in Chile and the low boom in the signing of the US cotton contract (the Chinese buyers still do not want to buy the US land cotton), they have not stopped the pace of the ICE cotton futures rebound.

In October 30th, before the opening of ICE futures contract, it was 65.85 cents higher, breaking the 66 cents mark. Some institutions and international cotton traders have decided that the market sentiment is gradually shifting from empty to open, and the empty force is going to open up and run away. The main contract is brewing up. Once the joint promotion of the fundamentals and the peripheral market is favorable, ICE will open up the key point of 68 cents / pound, then 70 cents / pound, 73 cents / pound or shape will not be much resistance, and the bull will be 75 cents / pound. The short term and short term will be set up near 68 cents / pound to facilitate the decisive battle; and whether the first stage agreement of Sino US trade negotiation can be successfully signed will be the key to break the 68 main contract of ICE.

The author thinks that the rise of ICE can be described as down-to-earth, with a single view, and the components of capital speculation and emotional catharsis are not large. The probability of being forced to open 68 cents or even 70 cents is large. The reasons can be summarized as follows:

First, the basic supply of cotton in the northern hemisphere has increased, and the USDA monthly report is facing adjustment. Not only in the central and Southern cotton fields of the United States, but also in Texas, the temperature and snow will continue to fall; the India monsoon will not only lead to the decline of the quality of new cotton, but also the output will be much lower than expected; after the strong expectation of the decline in unit production and the decrease in total production in some cotton areas of Xinjiang, China, the trend of global supply and demand in 2019/20 will turn.

Two, the Sino US trade negotiations are in full swing. The cancellation of the APEC conference does not affect the signing of the first stage agreement and the second phase of consultations. In response to Chile's abandonment of the APEC conference, the US side responded to the first stage agreement between China and the United States at any time and place. According to the industry analysis, with the completion of the technical consultation of some texts, the obstacle to the agreement has been removed. In addition, the US presidential election and the economic data are not ideal.

Three, the Federal Reserve has cut interest rates continuously and launched large-scale printing mode, triggering a strong rebound in global financial, debt and commodity markets. In October 31st, the Federal Reserve Open Market Committee (FOMC) announced a 25 basis point cut of interest rate to 1.50%~1.75%, which was in line with the expectation that the European Union, China and other countries were forced to follow suit to reduce interest rates and reduce liquidity for the third time reduction in the year.

Four, India, Pakistan, Vietnam and other Southeast Asian countries have greatly increased demand for us cotton and are directly competing with China's procurement. Once China opens $400-500 billion in imports of US agricultural products (regardless of storage or market operation), ICE will open up and break ahead.