On March 19, local time in the United States, high-level talks between China and the United States ended. As expected, the talks did not reach any agreement, and the two sides did not even see a unified view on any issues. However, at separate press conferences held after the talks, both sides seemed to believe that the talks were necessary and that they had achieved their goals, which was consistent with the views of Cui Tiankai, Chinese Ambassador to the United States, on March 17.
Cui Tiankai said in a joint interview with Chinese media that this meeting is the first face-to-face communication between high-level officials of China and the United States since U.S. President Biden took office, and China does not expect a dialogue to resolve the issue. On all issues, there are no high expectations or illusions. I hope that the talks can be a beginning, and both parties will come with sincerity and leave with understanding.
This Sino-US meeting not only allowed the international community to see more clearly the key points of differences between China and the United States, but also made both sides more clearly aware of each other’s bottom line and how to deal with the future issues between the two sides. Relationships are beneficial. The impact on the entire global economy, trade, exchanges, finance, commodity futures and other markets is expected – disappointing but not out of the ordinary.
On March 19, the ICE market opened low and then rebounded in a “V” shape. Although the main contract failed to hold the 85 cents/pound mark, as the top management of China and the United States The outcome of the talks was “neutral” and energy futures such as grain and crude oil rose. The downward pressure on cotton prices gradually eased, and the atmosphere of momentum, oscillation and rebound gradually gained the upper hand.
In this regard, some foreign businessmen and institutions are bullish and their bullish sentiment has rebounded for the following reasons:
First, China and the United States The high-level strategic talks are “concerns overshadowing happiness”. The first phase of the Sino-US trade agreement has not been affected in any way. China’s door to the import of US agricultural products has always been open (including cotton);
Second, global agricultural product prices continue to rise. Grain, cotton, soybean and cotton are competing for land in various countries around the world. The spread of the epidemic and natural disasters have led to insufficient production of agricultural products, triggering global shortages of food, agricultural and sideline products, and the rising trend is unstoppable. In February 2021, international sorghum prices increased by 82.1% year-on-year, international corn prices increased by 45.5% year-on-year, and international wheat prices increased by 19.8% year-on-year;
Third, the basic price of U.S. cotton The outlook continues to improve, and funds are waiting. On the one hand, US cotton in 2020/21 is close to oversold; on the other hand, ICE has entered the stage of speculation on weather, planting area and USDA global supply and demand forecast data, especially the weather in the main cotton-producing areas is becoming more and more critical;
Fourth, the US fiscal stimulus cannot be stopped, and global inflation is inevitable. After the passage of Biden’s $1.9 trillion economic stimulus plan, the US president may have his sights on a bigger bill – infrastructure, and Democrats are already considering how to spend without Republican support. If the United States invests heavily in infrastructure, R&D technology, and education, it can increase productivity from the supply side and accelerate expectations and risks of global commodity inflation. </p
