International cotton price linkage closely focuses on China's demand trends

Last week (21-27 May), by the hype weather factors, ICE Futures prices soared to a new high of nearly four years, global cotton and cotton yarn prices rose across the board. With the sharp rise in ICE futures December contract, it is expected that the international market cotton price will remain at a very high level in the next year.

According to statistics, on May 25, ICE futures July contract price further soared to 89.21 cents, up 2.66 cents, up 3.07%; December contract rose 4.22 cents, up 5.12%. The spread between the December contract and the July contract narrowed from 5.24 cents four weeks ago to 2.56 cents. As the market's concerns about the dry weather in Texas increase, it is expected that ICE futures prices will test 90 cents in the short term. In addition, the weather will delay the sowing time of new cotton, which will play a supporting role in the cotton price trend in the next year.

In the past two weeks, cotton prices in the Chinese market have experienced the biggest increase in recent months. The profit margin of China's yarn and fabric factories is still 60%, but as cotton stocks continue to decline, the demand for cotton in the Chinese market is very strong, and the next cotton price is expected to test higher.

In the past two weeks (May 14-27), Chinese cotton yarn prices have risen sharply and market demand remains strong. Recently, China's reserve cotton auctions have performed well, but with the gradual reduction of reserve cotton stocks and the continued strong demand for high-grade cotton, the demand for cotton in the Chinese market will turn to the international market, and the demand for Indian and US cotton will be raised. Zhen, cotton prices in the current and future seasons will be pushed up.