In recent weeks, China and the United States announced that the resumption of negotiations in October brought a good stimulus to the Chinese market. Zheng cotton futures rose 3.1% and spot prices fell. ICE futures remain below 60 cents and there is no sense of direction in the market. The December contract is unable to break the ceiling of 60 cents. With the increase in global production and slower growth in consumption, the fundamentals of cotton are not conducive to price increases.
ICE futures have been lower than 60 cents for 5-6 weeks in a row. This week's US cotton export weekly report will reflect the demand of the market below 58 cents. If such a low price can not stimulate the export of US cotton, it is estimated that there will be little hope for us cotton exports. As of August 29th, the US cotton contract volume accounted for 51.4% of the US cotton export forecast, which was 45% higher than that in the last five years. However, with the escalation of Sino US trade war and the increase of import tariffs of US cotton, the smooth implementation of the US cotton contract is unknown.
In September 9th, ICE futures trading was slack, and the market was concerned about the USDA supply and demand forecast released on Thursday. Some traders believe that the US cotton situation is in a bad position in the near future. The output of cotton and the ending stocks will be lowered, but the export of US cotton will probably decrease.
In the short term, the Sino US trade war, the pressure of new cotton harvest and the sluggish market demand may still drag down ICE futures. As global economic growth slows down, many countries maintain negative interest rates and high sovereign debt. The ECB may launch a new round of quantitative easing stimulus policy.