Affected by the negative impact of the risk of the global outbreak of the new coronavirus pneumonia epidemic, the world economic growth rate in 2020 is likely to fall below 3%, the global financial market, stock bond market and commodity futures have The market suffered a bloodbath “one after another”. On the 27th, the US Dow Jones Index plummeted by 1,191 points (the largest single-day decline since February 5, 2018), plummeting 11.13% in the past four trading days.
As the saying goes, “When the nest is overturned, the eggs are never finished.” The main contract of ICE cotton futures fell strongly below the support levels of 68 cents/lb, 65 cents/lb, and 62 cents/lb. The key point of 60 cents/pound is also in jeopardy. Bulls and speculative funds appear to be “fearful and fearful” in the face of the out-of-control COVID-19 epidemic. Judging from the external situation and technical graphics, there is a strong expectation that ICE will briefly open 60 cents/pound.
The direct result of the continuous high-level dive of ICE futures is that the FOB, CNF, and CIF quotations of US cotton, Brazilian cotton, West African cotton, Central Asian cotton, etc. have fallen sharply. International cotton merchants and export companies with 100% hedging When the time comes for arbitrage operations to be “familiar”, the two-pronged model of “selling spot and closing short orders” becomes popular. On February 28, the quotation price of US cotton ME 51-4/51-5/51-6 (length 1-1/8 and above, strength 29-31GPT) for the March/April shipping date in major ports such as Qingdao and Zhangjiagang dropped to 68.35 -68.55 cents/pound, and Brazilian cotton M 1-1/8 (strong 28-29GPT) for March/May shipment is quoted at 71.30-71.50 cents/pound, both falling sharply from mid-February.
However, the quotations of Indian cotton M 1-1/8 and M 1-5/32 for the March shipping date of 2019/20 are still as high as 74.2-74.5 cents/pound and 75.5-76.5 cents/lb. / pound, which is 6-7 cents / pound and 3-4 cents / pound higher than the same quality of US cotton. The competitiveness in the international market has declined significantly. An international cotton merchant reported that it was affected by many factors such as CCI’s price increase (as of late February, CCI had purchased a total of 6 million bales at MSP), the Indian government’s vigorous protection of farmers’ rights and restrictions on cotton exports to China due to the epidemic, and the appreciation of the Indian rupee against the US dollar. , the price of Indian cotton fell back to a relatively small extent with ICE futures; coupled with the shortcomings of Indian cotton’s low grade, quality, poor consistency and high foreign fiber, the price/performance ratio is significantly lower than that of cotton from US cotton, West African cotton, Brazilian cotton and other cotton origins. Some traders judge that because the price difference between Indian cotton and US cotton continues to widen, expectations that yarn mills in China, Vietnam, Indonesia, Bangladesh and other countries will default on Indian cotton contracts for the 1/2/3 shipping period have increased significantly.
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