Last week, ICE futures rebounded sharply, and the December contract easily broke through the 60 mark mark because the optimism in the Sino US trade talks is heating up again. However, the USDA's supply and demand forecast has raised global inventories, so in the long run it still has pressure on prices.
According to the South China Morning Post, last week, China and the United States began to reconsider the agreement on the basis of negotiations in April. China began to make an inquiry about US agricultural products in order to establish a good atmosphere for negotiation, and the US also postponed tariffs on Chinese products to show goodwill. Although it is not yet clear whether cotton is in China's purchasing list, speculative funds think it is time to smooth out some positions. In September 12th, the December contract rose from 59.37 cents to 62.21 cents, followed by a slight upward trend. In December, the contract rose 3.7 cents, or 6.3%.
The optimism of the current market for Sino US trade negotiations may prompt prices to remain strong in the short term, but cotton fundamentals still suppress prices. With the US Department of agriculture's September supply and demand forecast negative impact, the new year's global end inventory rose more than expected, reaching 83 million 750 thousand packages, an increase of 1 million 300 thousand packages.
On the other hand, the price of chemical fiber will rebound after the attack of Saudi oil depot, and it will also provide support for cotton prices. In the next few weeks, market uncertainty may increase and price volatility may increase. On the whole, cotton fundamentals do not support prices going up sharply. Before the outcome of the Sino US trade negotiations, prices are likely to fall to a consolidation rate of around 60 cents.