When The Market Is Coming Out, When Will The ICE Cotton Rebound Be Confused?

For investors and bond markets, this weekend is not calm. In addition to the July 22nd launch of the science and technology board, there are two positive news: first, in the evening of July 18th, Liu He, the Chinese leader of the Sino US comprehensive economic dialogue, spoke with the US trade representative, leet, and finance minister, on the implementation of the consensus of the two heads of state meeting in Osaka and the next exchange of views. Two, recently, the Chinese enterprises concerned had asked the US exporters to purchase agricultural products according to the needs of the domestic market, and according to the relevant regulations of the Customs Tariff Commission of the State Council, they applied to exclude the tariff imposed on the imported products from the United States (the US announced the exemption from the 110 Chinese industrial products exemption from the United States), and expressed willingness to promote the continued supply of the US enterprises for the relevant Chinese enterprises. The following are the following: (1) in July 22nd, the United States announced a tariff exemption for imported products from the United States. In addition, ICE's main contract fell below 62 cents / pound (low 61.66, a new low since June 2016). Not only did it come up with a certain amount of buying, but also stimulated the short back to make up, so ICE rebounded rapidly, and it was close to 64 cents / pound.

Can ICE continue to rebound strongly and head straight to 68 or even 70 key points? Some institutions, investors, and cotton companies are divided. After all, Sino US trade negotiations are going to be confused. The US and Iran in the Persian Gulf and other central banks are opening up interest rate cuts. There are too many external uncertainties. The fragile ICE disk may change at any time.

The author's view is that cotton prices rebound or flash in the pan.

First, the fundamentals of the United States and cotton have not changed. US cotton growth and seedlings tend to be normal, cotton signing and shipping continue to be sluggish (Chinese enterprises do not buy), and global cotton consumption is declining. (USDA is expected to raise the final inventory again); two, it is a great goodwill for Chinese enterprises to buy new US agricultural products, can they be recognized and responded positively by the US side? Industry analysis, imports of agricultural products are nothing more than soybeans, corn, sorghum, corn wine dregs, pork and so on. However, from the US dollar president's undenying 325 billion dollar commodity tariffs, the Sino US trade agreement differences and the US side refusing to give in and China and the us to increase the sanctions against the other side, China's goodwill is quickly diluted or digested. Three, the signing of the southern hemisphere's cotton sales in Australia and Brazil is in full swing. From the survey, since mid June, Vietnam, India, Pakistan, Bangladesh, China and other buyers "Empathy", have increased the quality of Brazil cotton in 2019/20 inquiry and procurement, the United States quilt substitution and reduce the use of increasingly prominent phenomenon.