Sino US Trade Change Cotton Prices Continue To Retreat

During the May 1 period, US President Trump threatened to impose tariffs on Chinese products. The first phase of the Sino US agreement is facing a dangerous situation, which again raises the market's concern about China's demand. Affected by it, ICE futures market suddenly changed. In May 1st, -5 fell three days in a row. The main contract in July dropped from 57.33 cents to 53.58 cents, or 6.5%.

Some policy analysts believe that Trump claimed that China's responsibility for the new crown epidemic is the beginning of the cold war in twenty-first Century, which will lead to a slowdown in Sino US trade and even a complete overturn of the first stage agreement between China and the United States. As Sino US trade relations become more intense, after the resumption of recovery in April, cotton prices in May are likely to erased the artificial increase of water flooding all over the world.

According to the latest data released by CFTC, as of April 28th, the net short positions of hedge funds and large speculators decreased to 348, down by more than 90%. Among them, there are 47524 hands in non commercial long positions and 47872 hands in short positions. This reflects a rise in confidence in the recovery of cotton demand, but the change in Sino US relations can not be ignored.

Foreign analysts believe that although cotton prices are very low, cotton mills in various countries are waiting for new orders to come back to production. Before that, cotton is not intended to be purchased. Whether China's large-scale procurement can be realized later depends on the easing of relations between the two countries. Moreover, at the present stage, China's US cotton import list is not the behavior of the textile mill. It is nothing more than the shift of global inventory. The cotton sold has not formed a real consumption. Textile mills in China during the May 1 holiday have also reduced textile production. The resumption of production in the United States and Europe has been slow. The United Nations estimates that the global unemployment rate may reach 1 billion 600 million, and the recovery of cotton consumption is longer than imagined.