In the past week, ICE futures overall maintained a strong trend, with the July contract down 0.57 cents, or 0.73%.
After China announced the rotation of reserve cotton, international cotton prices began to show a weakening trend. In theory, the reserve cotton round will supplement the low-grade cotton resources on the market, thus reducing China's demand for US cotton. However, this year's rotation time has been significantly shortened, and the number of listings per day is only 10,000 tons, far lower than the level of 30,000 tons in previous years. Therefore, the rotation has little effect on the US cotton and the international market. Currently, the official announcement has not been announced. Limiting the bidding qualifications of traders, which supports the price during the round-off period.
According to foreign analysis, China's reserve cotton stocks have reached the lowest level. In the next few years, they will prepare for the regulation of market prices. Imported cotton may be imported at an appropriate time to ensure that stocks of reserve cotton are kept at a reasonable level. The agreement will prompt China to import large quantities of US agricultural products. In this regard, China’s rotation of reserves will not suppress international cotton prices.
Earlier, China also issued an additional 800,000 tons of sliding quota cotton import quota, which helps domestic textile companies to import cheap cotton and maintain their competitiveness. In fact, Chinese buyers are still prepared to convert their purchases to US cotton.
Based on the above analysis, if China returns to the international market, ICE futures will continue to rise.
From the recent period of time, the purchase of foreign cotton by Indian textile mills has provided strong support for ICE futures. As of the week of April 18, it signed another 74,600 bales of cotton. In the current year, it has signed a total of 239,000 bales of US cotton. Turkey, Vietnam and Indonesia also purchased a large number of US cotton.
In the Chinese market, Brazilian cotton and Australian cotton are still very attractive. In the past three months, the price of Brazilian cotton has fallen sharply, while the price of Indian cotton has risen sharply. After the domestic cotton price in India rose sharply, the textile mills began to import cotton, and domestic cotton prices stopped rising.
Pakistan's cotton prices continue to climb because of the strong domestic demand for downstream textile companies. The China-Pakistan signed FTA will take effect on July 1, which has greatly stimulated the vitality of Pakistani textile companies.