On April 23, although Chicago grains fell, ICE cotton futures still rose sharply. Amid the severe weather and declining planting area in Texas, traders began to reassess the market.
On that day, ICE cotton futures closed close to the daily limit. The super performance of Chicago grain forced traders to take it seriously. In this case, there will be more losses in the Delta and Southeast regions of the United States. Many cotton fields have been converted to corn and soybeans, which has a significant impact on the cotton market.
That week, Chicago soybeans rose 7.5%, hitting another record high, corn rose 12%, reaching an eight-year high, and cotton rose 4.5%. Both soybeans and corn require more area, and cotton cannot bear to lose more area. The final outcome will not be known until the actual sown area in the United States is released at the end of June.
Currently, western Texas in the United States is still firmly controlled by drought. The market believes that if the drought continues, the area of US cotton sown will decrease. Although the La Niña climate will gradually recede, the current impact on the US cotton-producing areas will continue to exist. This year’s US cotton abandonment rate is likely to be a high number.
The latest weather forecast shows that there will be widespread heavy rainfall in Texas in the next 16 days, and some areas in western Texas, the core cotton area, will also experience rainfall. It is very beneficial for the fields to resume sowing. At the same time, excessive rainfall in the central and southern regions has delayed cotton planting, which may affect the final sowing area.
In addition to weather and land competition factors, commodities are both investment tools and weapons to fight inflation. The rise of commodities itself is an operation to fight inflation. The current rise is an Whether the transition period will continue long-term is unknown, but it is happening now, and cotton is part of the price increase.
Foreign analysts believe that the ICE Cotton Futures Fund’s net long position has declined for two consecutive months, but cotton prices have risen instead of falling, and market positions have continued to shrink. This is typical. Short covering, according to the development of the current situation, the fund may go long again, and there is still a lot of room. From the perspective of technical graphics, cotton prices have formed a long-term upward trend after adjustment. They will continue to fluctuate around the weather in the next month. During the price correction, there will be support from textile companies to replenish their stocks. </p
