On March 5, long positions continued to put pressure on cotton prices, and ICE futures continued to fall to a new low during this round of adjustment. Cotton prices have struggled since hitting a high of 95.60 cents on February 25.
Data released by the U.S. Department of Labor that day showed that U.S. non-farm employment increased by 379,000 in February, much higher than market expectations of 185,000-210,000. The main reason is that the number of COVID-19 infections dropped sharply. And vaccinations continue to increase. This data caused U.S. dollar interest rates to rise, with short-term U.S. Treasury bond yields rising sharply from 1.50% to 1.62%, stimulating the U.S. dollar index to rise.
Nonetheless, as states open up and vaccine supplies increase, the U.S. economic recovery may really accelerate. Before the epidemic, US dollar interest rates were 2%, so now it seems logical that interest rates are back to this level.
As of February 25, the cumulative contract volume in the United States for 2020/21 has reached 13.578 million bales, which is lower than the 13.347 million bales in the same period last year, but it is the second highest since 2010/11. The average value for the same period in the past five years was 11.277 million bales. As of February 25, the US cotton signing progress has reached 95%, and the average for the same period in the past five years was 85%.
On Tuesday (March 9), the U.S. Department of Agriculture will release a new supply and demand forecast. The industry’s average forecast for U.S. ending stocks is 4.06 million packages (3.9-4.3 million packages), which is lower than 2 From 4.3 million bales in February, the average forecast for global ending stocks is 95.5 million bales (94.81-96.0 million bales), down from 95.74 million bales in February.
On March 5, ICE futures finally stopped falling and rebounded. Ultra-low buying and short-term short covering supported the stabilization of cotton prices. However, despite the sharp correction in cotton prices last week, they still showed a long-term upward trend. In addition, the rebound in cotton prices that day was also driven by grain and energy prices.
At present, global textile production remains stable, and textile mills are looking for immediate raw materials. A correction in cotton prices should stimulate spot transactions. At the same time, the U.S. Senate passed the $1.9 trillion COVID-19 relief plan with difficulty last weekend, which is expected to start a new round of rise in commodities. It is expected that the main May contract of ICE futures is expected to return to above 90 cents, and the December contract will reach 85-85 cents. 90 cents. </p
