Good Price Drives Cotton Prices Up Steadily And Cotton Prices Challenge 70 Cents.

In December 23rd, the continued improvement in technology and the optimistic atmosphere of the first phase of the agreement between China and the US continued to drive cotton prices up steadily. In March, the contract rose 0.65 cents to 68.61 cents / pound, rising for fourth consecutive trading days.

Last Friday (December 20th), Chinese President Xi Jinping and the US President Trent Putonghua, both sides actively promote the signing of economic and trade agreements, and continue to boost market confidence. According to Xinhua news agency, since January 1, 2020, China will impose a provisional tariff rate of less than the most favored nation tariff for more than 850 commodities. Among them, in order to better meet the needs of people's lives, appropriately increase domestic imports which are relatively scarce or have foreign characteristics, and increase or decrease the provisional tariff rate of frozen pork, frozen avocado, non frozen orange juice and other commodities.

Ed Jernigan, chief executive of Jernigan Global, said that the cotton market predicted that the trade agreement between China and the United States would be signed, and cotton would also get a share. Meanwhile, cotton prices have broken through all key mobile averages to turn the fund to cotton bulls, which is one of the reasons for boosting the cotton market. The CFTC position report shows that as of December 17th, the fund's net position increased from 7932 to 10891. As the fund's positions are more idle, cotton prices will remain strong in the future.

In terms of fundamentals, the signing rate of US cotton has reached 72% of the USDA forecast, which is higher than the average of 65% over the past five years. The total contract volume has reached 11 million 93 thousand packages, the best year since 2010. At the same time, China's cotton prices are also gradually rising, creating space for late cotton imports. In recent weeks, the price of imported cotton in China has risen by 3-6%. The price increase of India cotton and Brazil cotton is the most obvious, because the domestic cotton prices in both countries have rebounded. The price of US cotton is more and more attractive. If China and the United States sign the final trade agreement after the Spring Festival and cancel the previous tariffs, China's demand for us cotton will expand significantly. However, whether or not it really needs a large amount of imports, the textile mill will still depend on actual demand. At present, the overall decline in China's clothing consumption may limit the demand for us cotton.

In recent years, cotton prices have continued to break through the upward trend of resistance. The March contract has set a new high in the current round. It has risen 20% since the end of August, and the May contract is only 70 feet away. Once the breakthrough is made, the market psychology will be greatly boosted. After the beginning of the new year, with the gradual digestion of new cotton in the northern hemisphere, the focus of the market will gradually shift from cotton production and Sino US negotiations to the 2020 cotton planting and weather in the United States. At present, the market generally believes that the area of the United States and cotton will be greatly reduced, and the Sino US trade prospects will be better. The current price increase will continue until the beginning of next year. At least, it is impossible for prices to fall again.