The Bearish Factors May Affect ICE Cotton Futures, Which May Quickly Fall To 55-60 Cents

On July 17, ICE cotton futures continued to decline under the pressure of a series of negative factors. In addition to the bearish technical graph trend and the record short position of the fund, the basic data of US and global cotton released by the US Department of Agriculture has caused lasting psychological pressure on the market. The latest forecast shows that the US cotton output in 2019/20 reached the highest level of 22 million bales in nearly 14 years, pushing the global ending inventory to more than 80 million bales! At present, the growth of American new cotton is getting better and better, and the proportion of good seedlings was further increased to 56% last weekend. The prospect of a bumper harvest of American cotton is changing from expectation to reality.

Dealers are pondering what can prevent the uncontrolled decline of cotton prices and the rebound of the market. The only possibility is that China US trade has reached an agreement. However, China wants to cancel all the increased tariffs before reaching an agreement. In this way, the possibility of a negotiation between China and the United States is very small. On July 16, Trump also said at the White House cabinet meeting that the United States still has a long way to go to reach a trade agreement with China, but if necessary, the United States may impose tariffs on Chinese goods worth 325 billion dollars.

On Thursday, the US Department of Agriculture will release the latest US cotton export weekly report. Last week, China cancelled the contract of 10000 bales of 2018/19 American cotton, and the purchase of new flowers was zero. You should know that China has promised to purchase a large amount of American agricultural products at the G20 Summit, and now the negotiations between China and the United States have resumed, the market is quite disappointed.

Under the influence of the above bearish factors, ICE futures fell to a new low on July 17, and hit a new low four times in the past seven trading days. Now the bargain buying has been thoroughly cleaned out, and the speculative short position has set a historical record, and its attitude of short futures is determined. Foreign futures analysts believe that ICE futures will soon fall to 55-60 cents.