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ICE's on-call cotton contract and cotton stocks analysis
July’17 contract on ICE cotton futures market loses ground and has been decreasing continually. By Jun 21, the market has dropped for a ninth straight session to more than eight-month lows. The high level of on-call Jul contract has drawing to a close and for the ICE cotton futures, will the marketl have new worries caused by on-call Dec contract or keep weakening pressed by expectation of higher cotton output in 2017/18 season? 

Viewed from monthly bar chart, the previous upward trend has turned and for long term, the market is relatively bearish. Viewed from daily bar chart, the trend of Jul contract has turned downward and 70.5cent/lb is the first support level, the market is very likely to stabilize at this level in short run. 

 
 
 
From the analysis on unfixed on-call contract, the total quantity of unfixed on-call contracts is in historical high, but has downward trend. The volumes of unfixed on-call July contract decreased sharply after force selling and have returned to a normal level at present, indicating that the July contract may be hard to surge and is likely to be range-bound weakly. More attention is paid to the unfixed on-call Dec contract, which has been in a historical high, but the tendency has slowed down somewhat. 

 
In terms of capital, net long position rate continued to decrease, which was an important cause for the downswing of ICE cotton futures. The bearish pressure on forward contract made long position reduce the open interests. For nearly contract, the weakness is hard to change, but for Dec contract, if the on-call contracts continue to increase, the capital sector may warm up. 

 
 
 
Global cotton stocks keep downward, but the downward tendency slows down somewhat. According to USDA, the ending stocks of U.S. cotton in 2017/18 season are projected to reach a historical high, which weighs on ICE cotton futures. The decreases of global stocks are mainly from China. On May 25 2017, the Ministry of Commerce of China said that China would increase imports from the U.S. in wide-ranging areas including agricultural products. If China increases the imports of quality U.S. cotton, it will improve the demand for U.S. cotton and alleviates the high stocks pressure. 

In conclusion, ICE cotton futures market may be in weak tone recently in short run, for medium to long term, it may step into downside. In the second half year of 2017, the high quality of on-call contracts may pep up the futures market somewhat, the upward tendency slows down somewhat and the support is not large. In the global market, the firm Indian cotton prices also shores up the ICE cotton futures somewhat. 
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