Does Ice Rise After Continuous Adjustment

Since the middle of March, the main contract of ice cotton futures has continued to consolidate at 85-88 cents / pound. From the perspective of position changes and daily trading volume, both long and short sides are in a wait-and-see state, and they are not confident enough to enter the market. However, the author still believes that the "safe area" for cotton textile enterprises and traders to copy and purchase is below 85 cents / pound, and 85-88 cents / pound is the signing Ice will return more than 90 cents / pound after a short-term adjustment and build-up in the low-risk area of taking goods. The reasons are summarized as follows:

First, the high-level meeting between China and the United States is more significant than the content. Even if substantive progress can not be achieved in the talks, it will not affect the continued implementation of the first phase of Sino US trade agreement;

Second, the Biden administration is ready to implement a tax increase plan (involving companies and high-income individuals) and a $2 trillion infrastructure plan. These are the other two big moves of the US government after the implementation of the $1.9 trillion economic stimulus plan, which is obvious to support the US stock and commodity futures markets;

Third, the US Federal Reserve announced on March 17 that it would maintain the target range of the federal funds rate between 0-0.25%, in line with market expectations;

Fourth, the cotton planting period in the northern hemisphere such as the United States and India is coming, and the weather will become the focus of fund and bull's attention and speculation;

Fifth, the monetary easing policies of central banks around the world have continued, and the momentum of inflation has intensified. The survey report of US manufacturing industry shows that the growth rate of input price continues to accelerate, the fastest growth rate in nearly 10 years, and the sales price rises sharply. The Institute for supply management's Manufacturing Purchasing Managers Index (PMI) shows price pressures are rising. The index of manufacturers' prices jumped to 86.0, the highest level since July 2008. Prices for almost everything from copper, coal and oil to battery metals and rare earths are rising. According to JP Morgan's global composite PMI, price pressures have reached their highest level in 12.5 years.