70 Cents Is Just A Prelude To ICE Cotton Futures Market Or Victory Pursuit.

In January 6th, the main contract of ICE cotton futures finally broke the 70 cents / pound resistance level (70.04 cents / pound), ending nearly a month of 67-69 cents / pound consolidation test market, and many funds and investors' bullish sentiment continued to spread.

According to CFTC statistics, as of now, the net prime rate of cotton fund in the ICE period has risen to 9.3%, indicating that the first stage trade agreement between China and the United States is about to be signed (there is news that the Chinese delegation will leave for the United States on January 13th), the accelerated rebound in crude oil and agricultural products futures prices and the signing of the US cotton export contract in the year of 2019/20 will continue to "advance triumphantly". The short and cotton trading enterprises have begun to retreat to 72 cents / pound or even 75 cents / pounds.

Some institutions and cotton makers believe that there are two main factors that threaten the ICE inflation in the short term. First, the US manufacturing industry continued to deteriorate in December, and the index fell to 47.2 again from 48.1 in November. This is the lowest level since June 2009, which means that the US economy has again turned on a red light. Two, the situation in the US and Iraq suddenly heated up due to the US air raid on Baghdad's killing of Iran commanders. As Iran promised to make a tough response to the United States, and began to abandon the last key restriction on the number of centrifuges in the Iran nuclear agreement, the probability of a "war on fire" and even the outbreak of war in the United States and Iraq has increased, which has impacted on global financial markets, economic recovery and commodity futures rebound.

In terms of fundamentals and news, China and the United States will open at least 40 billion U.S. dollars for the purchase of agricultural products (including 60-80 tons of cotton) in January 15th when China signed the first stage trade agreement at the White House. There are also several aspects to support the ICE main contract for 75-78 cents / pound.

First, not only the commodities such as crude oil and gold have been rising, but also the agricultural products such as grain and so on; two, the large-scale storage and purchase of CCI in India (according to the seed cotton calculation, the 73-74 price / pound of India lint "bottom"), and the support for ICE uplink; the three is influenced by the Sino US trade war and the import quota; at present, there are only a few foreign businessmen and large import enterprises in the main body of the US cotton business, and the resources and prices are all monopolized, especially the high quality and high grade cotton. Four, the sale of American cotton resources in 2019/20 is relatively limited, and the quality of the products is rather limited. According to USDA statistics, as of December 26th, the United States signed a total of 2 million 602 thousand and 400 tons of Upland Cotton in the 2019/20 year, an increase of 8.5% over the same period last year, and completed 75% of the forecast exports this year (5 years mean 69%), so the US cotton exports in the first half of 2020 showed a "surplus of porridge", and the price was easy to rise and fall.