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Since mid-January, ICE cotton futures have entered a downward slump due to the negative pressure on commodity futures and the continuous strengthening of the US dollar caused by the outbreak of the new crown pneumonia epidemic, the global stock and bond market plunge, and the main May contract fell from 73.08 cents per pound to 50.68 cents per pound (the intraday low hit a new low since May 2009). In just two months, ICE plunged 22.4 cents per pound, a drop of 30.65%.
Some institutions and cotton-related companies have judged that once the epidemic is out of control worldwide, trade, exchanges, transportation, and so on are likely to be greatly impacted or even interrupted; coupled with the substantial decline in cotton consumption, it is almost "stubborn", so ICE has a short-term breakthrough of 50 Cents per pound or even 47 cents per pound of momentum.
From the feedback of some international cotton merchants and exporters, although the main contract breaks 55 cents / lb and 52 cents / lb caused a lot of ON-CALL point price contract transactions (2019/20 US cotton not only continued to overbought, In addition, buyers from Vietnam, Turkey, China and other countries are very strong in signing purchases. But on the one hand, because ICE futures have fallen too quickly, many contracts signed before January 2020 are difficult to enforce or directly destroy the contract (even cotton arrives in Hong Kong, and the buyer The phenomenon of no delivery or negotiation). Although some buyers want traders to delay shipments and deliveries, the probability of default has increased significantly. A cotton company in Qingdao said that because some foreign companies and cotton importing companies generally only receive 5% -10% of contract deposits from old customers and large customers (15% -20% of deposits from new customers and small buyers), so once During the contract period, ICE futures and cotton spot prices plummeted by more than 20% or even 15%, and the buyer's enthusiasm for fulfilling the contract fell sharply. Delays in shipment, re-signing of contracts, or breach of contract increased accordingly;
On the other hand, ICE's main contracts broke through 60 cents / pound and 55 cents / pound, approaching 50 cents / pound. From the external market and technical point of view, cotton prices have no bottom, and global textile mills and traders no longer take the initiative Orders to minimize the risk of a sharp drop in raw materials. From the survey, some buyers think that under extreme negative conditions, ICE's main contract or test has a low of 41.71 cents / lb (the lowest point of 40.25 cents / lb) for more than 17 years, so the sentiment of "kill and chase" Thicker.
