Since late July, the main contract of ICE cotton futures has broken through the 90 cents/pound mark several times in a row. The short defense line has been breached again and again. The center of gravity of the December contract has gradually moved up to 90-90 cents. 95 cents/pound range, but compared with Zheng cotton and MCX futures, the increase of ICE is still low, and the confidence and confidence of bulls, capital speculation, and short squeeze are insufficient.
As for the reasons why ICE has continued to rebound in the past week, the industry generally summarizes the following points: First, due to weather reasons, the budding and boll setting rate of US cotton is not ideal, which is significantly lower than In the first two years; secondly, the Chinese government issued a 700,000-ton sliding quasi-tax quota, which significantly stimulated the sales of foreign cotton cargo and bonded cotton; thirdly, peripheral chemicals, heavy metals, iron ore and other ferrous commodities and agricultural product futures were limited to The decline has rebounded, and the commodity rally is expected to “make a comeback.” The author believes that at present, regardless of the technical aspects of ICE futures, trader sentiment and external markets, after ICE broke through the first target of 90 cents/pound, the bulls pushed it higher to try the second target of 92 cents/pound or even 95 cents. The possibility of the third target / pound exists, but the risk of chasing longs and killing shorts above 92 cents / pound has obviously increased. The operation idea of ”looking long, not doing long, and sitting on the sidelines” is more appropriate.
First, mutant strains such as “Delta” spread rapidly, greatly increasing the probability of a “resurgence” of the new coronavirus epidemic. Worldometer real-time statistics show that the number of confirmed cases in the United States exceeds 85,000 daily. With the surge in confirmed cases of COVID-19 in the United States and the stagnant vaccination rate, the COVID-19 epidemic in the United States is once again out of control. Recently, European countries such as the United Kingdom, Russia, Germany, and France, as well as Asian countries such as India, Indonesia, and Vietnam have been deeply affected by the epidemic. In the quagmire, the global economy, trade, transportation, exchanges, etc. may be hit again;
Secondly, although the Fed’s interest rate meeting in July will not update the dot plot (rate hikes are expected in advance) Not strong), but may start to reduce the scale of bond purchases and the “advance notice” of this decision. Both measures may have a greater impact on the market than the actual reduction of the scale of bond purchases. The U.S. dollar index may rebound and run stronger , the compensatory growth momentum of bulk commodities has been suppressed;
Thirdly, the sharp increase in sea freight and the “hard to find” containers have affected the global trade and trade of cotton, cotton textiles and clothing, etc. The impact of transportation is increasing, and there are great variables in the recovery of cotton consumption in 2021/22. According to the survey, various shipping companies will start a new round of price increases starting in August, and the additional fees charged by shipping companies are also becoming diverse. In addition to the previous surcharge (GRI) and peak season surcharge (PSS), the latest charge item – value-added fee (VAD) is also introduced this time. Starting from September 1st, MSC will levy port congestion fees; starting from August 5th, Matson will increase port congestion fees (after three port congestion fees are added up, the 45-foot container will be as high as US$5,697). According to industry analysts, as the peak transportation season is approaching, the current strong demand and limited capacity in the market may continue into next year. Coupled with high prices, sellers are being urged to book in advance for this year’s air and ocean freight season. For the export of cotton textiles and clothing, which has low profits and a large demand for containers, the continued rise in sea freight and other expenses, as well as the serious shortage of containers, have swallowed up most of the profits, and the enthusiasm for accepting and arranging orders has declined relatively quickly. </p
