According to CFTC statistics, as of November 29, 2022, the long rate of ICE Cotton Futures Fund has dropped to 6.92%, a drop of 1.34 percentage points from November 22; and as of November 25, the ICE Futures 2022/23 ON-CAll contract 61,354, a decrease of 3,193 from November 18, and a decrease of 4.95% in one week, indicating that the phenomenon of buyers setting prices, sellers repurchasing, or both parties negotiating to postpone price setting is relatively active.
In late November, ICE’s main contract broke 80 cents/pound again. Instead of entering the market in large numbers, funds and bulls continued to liquidate their positions and flee. A large cotton trader has judged that the main short-term ICE futures contract may continue to consolidate in the range of 80-90 cents/pound, still in a state of “top and bottom”, with fluctuations significantly weaker than in September and October. Institutions and speculators mainly operate by “selling high and buying low”. As there is still great uncertainty in global cotton fundamentals, policies and external markets, and the countdown to the Federal Reserve’s December interest rate meeting has entered, so Cotton processing companies and cotton traders have little chance of entering the market, and the atmosphere of wait-and-see and waiting is strong.
According to USDA statistics, as of December 1, a total of 1.9559 million tons of US cotton have been inspected in 2022/23 (weekly inspections reached 270,100 tons last week); and as of November 27, the US cotton harvest progress is 84%, of which the harvest progress in Texas, the main cotton-producing area, has also reached 80%, indicating that although most of the main cotton-producing areas in the United States have experienced cooling rains since November, and harvesting in the southeastern cotton area has been stagnant, the overall harvest and processing progress is still relatively fast. , ideally, some U.S. cotton exporters and international cotton merchants predict that the shipment and delivery of U.S. cotton in 2022/23, scheduled for December/January/February, will be basically normal and will not be delayed.
However, since the end of October, Chinese buyers have not only begun to significantly reduce and suspend signing contracts for 2022/23 US cotton, but also canceled 24,800 tons of contracts in the week of November 11-17, which has made international cotton merchants and traders increasingly worried because Countries in Southeast Asia, South Asia and other countries cannot replace or make up for China’s reduced signings. A foreign businessman said that although epidemic prevention and control policies in many places in China have recently been loosened, economic recovery expectations continue to heat up, and all parties have strong expectations for China’s cotton consumption demand to bottom out in 2022/23, but considering the greater risk of global economic recession, , the RMB exchange rate fluctuates widely, the inversion of domestic and foreign cotton prices is still prominent, the Xinjiang cotton export ban “blocks the road”, inflation and other factors, it is not appropriate to have too high expectations for the rebound height of ICE, Zheng cotton, etc.