What will happen to ICE after four consecutive rises in the |?

The following is a personal opinion, the content is for reference only, does not represent China Cotton Network, does not constitute investment advice to anyone, otherwise all the consequences are borne by the individual!

Since the end of September, ICE cotton futures "four consecutive yang", the main contract has broken 90 cents / pound, 92 cents / pound, 95 cents / pound, 96 cents / pound and other integer marks, 90 cents / pound below the cotton textile enterprises and middlemen who have not entered the market in a big way, stepping on the market are remorseful, and their mentality is complicated.

For the reasons for the violent rebound of ICE on Friday, the reason for the strong opening of the 95 cents / pound "window", the industry summarized the following four points: first, in recent days, the New Zealand crude oil futures, Chicago COMEX copper prices and other commodities continued to rise, stimulating ICE to stabilize and rebound; second, Sino-US relations eased, and the first phase of the trade agreement accelerated implementation. The settlement of Meng Wanzhou's case has made the outside world look forward to a certain degree of easing of Sino-US relations; the third is that one-third of the cotton-producing areas in the Indian state of Punjab have suffered insect infestation (about 33%), the crop damage area is extensive and the disaster continues to worsen, "assisting" ICE to recover lost ground; fourth, the inventory is low, and the strong demand makes the fund and bulls look forward to the growth of cotton imports in China and Southeast Asian countries in 2021/22.

So under the premise of breaking 96 cents / pound on ICE, should cotton spinning companies continue to chase more and force shorts? The author's opinion is that the probability of ICE breaking through the annual high of 96.71 cents / lb is larger, the disk or the upper test of 98 cents / lb or even challenge 100 cents / lb, but once the breakthrough of the previous high, do more need to be cautious, ICE into the "easy to fall and difficult to rise" range.

First of all, the global new crown epidemic is still in place, with the arrival of winter and the school season, Europe and the United States and other countries prematurely relaxed epidemic prevention measures and global vaccination imbalance, there is great uncertainty about the "black swan" of the new crown; secondly, in 2021/22, Brazil, Australia and other southern hemisphere countries will increase the cotton planting area (Brazil cotton production is expected to increase by 10%); again, the Fed finally released a clear signal: Taper "nailed down" during the year, the financial market, In addition, some international cotton merchants and investment banks judge that the frequency of hurricanes and storms in the main cotton-producing areas in the United States in 2021/22 is significantly weaker than that of the previous two years and although the growth is lagging behind year-on-year, the good seedling rate has increased significantly, so the USDA may further increase the production and ending inventory of the US cotton in 2021/22, which is not conducive to ICE.commencing.

【Everyday ICE】From falling to rising, what has the cotton price experienced?

China Cotton Network News: On September 24, under the influence of technical strengthening and hurricane "Sam", ICE futures continued to test the rise intraday, and the main December contract closed up 353 points, and the settlement price returned to 95.99 cents / pound, setting a record for the December contract since 2012.

On Monday, ICE futures once followed the global financial market plunge 300 points under the influence of China's Evergrande event, but in the case of crisis concerns subsiding, the Fed's short-term policy to give the market a "reassurance pill", and the us cotton exports frequently blowing warm winds, ICE immediately rose for three consecutive days, completely returning to the level before the current round. On September 24, optimistic expectations of cotton demand prompted fund bulls to continue to drive up cotton prices in a frenzy, and the December contract directly returned to an all-time high of 96 cents.

According to the National Hurricane Center, Sam will strengthen further this weekend, but its direction is still uncertain, and it is difficult to predict where it will land in the United States. At present, the new cotton harvest in the United States is 9% complete, and the new cotton spit has reached half, and the new cotton at this time will be more vulnerable to hurricanes.

Although the rise in cotton prices has the element of speculation triggered by Hurricane "Sam", the most important thing is that the market is quite optimistic about demand expectations. As of September 16, China has occupied the first place in the US cotton contract for several consecutive weeks, the current large-scale domestic power ration has not brought a significant impact on cotton consumption, after digesting product inventory and raw materials, enterprises will continue to increase their efforts to purchase, "Golden Nine Silver Ten" may be because of power cut and presented in another way.

From a technical point of view, the new high of the December contract is undoubtedly a bullish signal, and it also allows cotton prices to continue the long-term upward trend that began in April 2020. The CFTC's holdings report released friday showed that non-commercial net bulls fell 13,198 lots to 95,025 lots, but remained at a very high level. At the moment when the reserve cotton rotation is coming to an end and the new cotton has not been listed in large quantities, the outside world has high expectations for China's import demand, and speculative funds may be looking at this point to raise cotton prices again.

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