Industry Watch: US Controls Cotton Pricing Power With Ice On Intercontinental Exchange

 

 

In 1870, the New York Cotton Exchange emerged as the times require. In the same year, cotton futures trading was launched. In the following 130 years, although there were 14 other commodity exchanges in the world and cotton futures trading was carried out, only the New York Futures Exchange survived. Because of the first mover advantage of the United States, financial derivatives were extremely developed, This is also an important reason why the US can use the ice to control the global cotton pricing power.

 

Ice cotton futures include futures contracts of some major cotton producing countries such as the United States. The main quotation is American cotton quotation.

 

In recent years, the United States seems to feel the challenge. On June 1, 2004, Zhengzhou Commodity Exchange listed cotton futures varieties. At present, it has been running for 17 years, and its influence in the global cotton market has gradually increased. In April 2016, the cotton futures of Zhengzhou Commodity Exchange created an amazing trading volume of 41 million bales per day, while the transaction volume of American cotton was only 3.3 million bales on the same day. It can be said that China's daily cotton trading volume has no suspense under the pressure of the United States.

 

Behind this is the fact that the US cotton production has been rapidly overtaken and China has become one of the most influential countries in the world cotton market. In 2020, China's cotton output will be 5.95 million tons, of which Xinjiang alone will contribute 5.2 million tons, accounting for 87% of the country and 1 / 5 of the world.

 

In addition, as the world's largest textile producer, China's domestic cotton is basically consumed, and there is a large demand gap every year; In contrast, the United States has basically shifted its textile industry to Asia; As a result, 82% of the US cotton output is exported, and the largest market is China.