On the evening of the 12th, the U.S. Department of Agriculture released its global production demand forecast for January. U.S. cotton exports increased, production and ending stocks decreased, and the reduction in U.S. cotton production significantly exceeded market expectations. The timing of USDA’s production reduction is intriguing.
To paraphrase the old saying: “When things go wrong, there must be a monster.” Generally speaking, US cotton exports remain low from September to November every year, while export shipments from December to March are relatively high. There is an ulterior motive for raising ICE prices during the peak export season. U.S. cotton begins to be picked in August and is harvested on a large scale after September. After December, it is the intensive sales period of U.S. cotton. From December last year to January this year, USDA has significantly reduced U.S. cotton production and inventories twice in a row. At this time, the continuous reduction of U.S. cotton production is to increase the profits of U.S. cotton sales by raising cotton prices, which will increase import costs for importing countries. In recent years, the authenticity of USDA data has been criticized. Whether it is US cotton production or Indian cotton inventory, it is a trick of the USDA to tease other countries. Although full of doubts, its influence is great. After all, this is the only global production and demand forecast.
The author’s previous analysis believed that cotton prices will continue to rise because it is expected that 2021 will be a commodity bull market. The worry now is that we don’t know what will happen to the market in the second half. Although the upward direction has not changed (consumption will rebound sharply as the economy recovers), the premise that the market expects a bull market is consistent, which is a huge risk in itself, and 2020 has already given us “black swans” and “grey rhinos” The power of investment still faces huge risks and opportunities in 2021. “The wise will change with the times, and the wise will adapt to the circumstances.” I believe that opportunities will always be reserved for those who are prepared. </p
