Since mid-March, the main contract of ICE cotton futures has continued to consolidate and gain momentum in a narrow box of 85-88 cents/pound. Judging from the changes in positions and daily trading volume, both long and short parties are in a wait-and-see state. Lack of confidence to enter the market in a big way.
However, the author believes that the price below 85 cents/pound is a “safe area” for cotton textile companies and traders to bargain and purchase, and 85-88 cents/pound is a low-risk area for signing contracts and purchasing goods. After short-term adjustments and gaining momentum, ICE will return to above 90 cents/pound. The reasons are briefly summarized as follows:
First, the high-level meeting between China and the United States is of greater significance than content. Even if the negotiations cannot achieve substantial progress, However, it will not affect the continued implementation of the first phase of the China-U.S. trade agreement;
The second is that the Biden administration is preparing to implement a tax increase plan (involving companies and high-income individuals) and a US$2 trillion infrastructure plan. This is Following the implementation of the $1.9 trillion economic stimulus package, the other two “big moves” launched by the U.S. government have clearly supported the U.S. stock and commodity futures markets;
The third is that the U.S. Federal Reserve announced on March 17 Japan announced to maintain the target range of the federal funds rate between 0-0.25%, in line with market expectations;
Fourthly, the cotton planting period in the northern hemisphere such as the United States and India is coming one after another, and the weather will become the focus and speculation of funds and bulls. Key points;
Fifth, the monetary easing policies of central banks around the world have continued, and inflation has intensified. The U.S. manufacturing survey report shows that input price growth continues to accelerate, with the growth rate being the fastest in the past 10 years, and sales prices rising sharply. The Institute for Supply Management’s Manufacturing Purchasing Managers’ Index (PMI) shows that price pressures are rising. The index measuring manufacturer prices jumped to 86.0, the highest level since July 2008. Prices for nearly every commodity, from copper, coal and oil to battery metals and rare earths, are rising, with price pressures reaching their highest levels in 12-1/2 years, according to JPMorgan’s global composite PMI. </p
