ICE Cotton Innovation Low Fall Into Such A Trend Of Market Outlook?

Since the beginning of July, ICE has launched a "diving look at the sea" mode. The main contract has opened the first 64.50 cents low, creating a new low of 62.60 cents since June 2016, and the short forwards 60 points of key support. Cotton traders, cotton growers and speculators continue to slide.

Some institutions and cotton enterprises believe that the international cotton market in 7/8 months is very limited in terms of fundamentals, policies and external markets. The trend of short selling and controlling is more and more obvious. On the one hand, the growth trend of the United States cotton is becoming normal, plus the signing of the US cotton export contract has dropped sharply in the year of 2018/19, and the USDA monthly report has been adjusted to increase the ending inventory and reduce the consumption of cotton. In 2019, the cotton and Brazil cotton exports to the United States and cotton have been attacked by the left and right sides, and the supply and demand level has been continuously fermented. On the other hand, Sino US trade negotiations have been deadlocked. The impact of the slow progress is not only the decline of China's imports of American cotton "cliff clipping", but also the Southeast Asian countries such as India, Pakistan and other countries, and the export of Chinese cotton yarns and grey fabrics should also fall back. Therefore, the growth of cotton consumption in China and Southeast Asia has no effect on ICE.

The author's view is that ICE is "empty but not short, short but not empty". There are still several uncertainties about the following factors, except that the main cotton producing areas in the United States are occasionally attacked by tropical storms.

First, the US Federal Reserve cuts interest rates. Federal Reserve Chairman Powell's recent speech and other Fed officials' reaction presage that the Federal Reserve will start cutting interest rates at the end of this month to stimulate the economy, boost finance and expand employment. The only difference is the rate of cut interest rate, which is expected to trigger a strong rebound in financial and commodity futures.

The two is Sino US trade consultation. The exchange of views between the two heads of state of China and the United States exchanged views on the Osaka meeting. In July, the 10 China US comprehensive economic dialogue leader Liu He and the US trade representative, Lai TSE, and finance minister Mnuchin called for the Sino US trade war to ease and the willingness to negotiate increased. The US Treasury Secretary, said on Monday, he said he expected to hold another telephone call with Chinese officials this week. "If we can make significant progress, I think we are likely to travel to China later," indicating that Sino US talks will go forward in divergence and digestion.

Three, the risk of conflict and war in the Gulf area is not ruled out. At about 0 in July 17th, President Trump said that the relationship between the United States and Iran has made progress, indicating that tensions in the Middle East may ease, and international crude oil prices should drop by more than 4%. But Trump did not provide details about progress, the tension between Britain and Iran and the great divergence of negotiations. Therefore, the gunpowder barrel in the Middle East is still at risk of being ignited at any time.