ICE Cotton Futures Decline, Cotton Prices Have Not Yet Completely Reversed The Downtrend.

Two weeks ago, ICE futures broke through the 60 cent mark with a long line on the occasion of the Mid Autumn Festival, but the subsequent week's continuous callback, which has been largely swallowed up to the beginning of Friday, has been delayed.

At least for now, cotton prices are not yet ready to reverse the downtrend and achieve real recovery. After a "false attack", speculative funds immediately returned to their senses in the face of the increasing demand for cotton and weak demand. Most importantly, after the frequent positive signals, the Sino US negotiations failed to follow up the substantive benefits and there was no reason for the short positions to open up on a large scale.

After this price rise, cotton demand is rather miserable. To tell you the truth, only textile mills can buy less than 60 cents. Before the price rise, the US cotton export also had only 85 thousand packages, which was only about half of the average USDA export forecast. After the price rises, US cotton exports must be even more miserable. Moreover, the number of contracts cancelled by China is increasing, including Bangladesh and Indonesia.

In recent months, the problem of contracts has always been there, but the fundamental problem is that the yarn sales are blocked, resulting in a large backlog of inventory in the upstream and downstream sectors of the industry chain. The mills are squeezed in the middle, production is difficult to increase, and cotton demand is reduced, thus falling into a vicious circle. Therefore, the recent decline in cotton prices is also a reflection of weak demand in major cotton producing countries.

Although the December contract has not fallen below 60 cents, the shortage of cotton may still keep prices low in the coming weeks. Because of the sluggish demand for cotton, only the reduction of new cotton production in the northern hemisphere can provide support for prices. From the recent situation, India's output may also be lower than expected during the new cotton harvest period in Texas. The current price trend is worth pondering. If the December contract can hold 60-60.25 cents, maybe the market can continue to test the high point of 61.50-65.00 cents, but in fairness, this situation is unlikely. In the absence of an agreement between China and the United States, prices will fall to 58.00-61.50 cents.