On March 3, as cotton prices were unable to resume their upward trend from a short-term technical perspective, the cotton market fell sharply. Traders are in urgent need of fresher good news stimulation, because as the transaction proceeds, market participants who have been bullish for a long time have begun to have no illusions about cotton prices.
The market usually changes so quickly. Two days ago, we were still talking about the fund’s net long position not reaching last year’s high. There should be enough ammunition to continue the upward attack. However, after the continuous sharp decline, traders Beginning to worry that the number of fund longs is so large, perhaps the time is ripe for the market to continue to pull back.
However, there will be several important reports on cotton prices in the next few days, which may be able to make some repairs to this pullback. Thursday’s weekly U.S. cotton export report bore the brunt. Considering that market psychology is very fragile, the market is in urgent need of eye-catching figures to cheer up. Last week, the contract volume for 2020/21 was 248,000 bales, a significant increase from the previous month, but the shipment volume was only 292,000 bales, a 6% decrease from the previous month. Entering the second half of the year, if U.S. cotton shipments cannot increase, it will be impossible to talk about the increase in U.S. cotton exports and the decline in inventories.
For Friday’s U.S. unemployment data, the market hopes that the sharp decline in the number of confirmed cases of the epidemic will create more jobs. The non-farm employment data in February is expected to be 185,000, much higher than January’s. 49,000. The CFTC position report released on the same day will also reflect fund positions after last week’s collapse in cotton prices. At least the market will know whether the fund’s net long position has increased or decreased. In addition, next week’s USDA supply and demand forecast will provide more fundamental guidance, and changes in U.S. fundamentals are particularly critical to later trends.
On March 3, the excessive rise in ICE cotton futures continued to converge. Although the price fell by more than 2%, the process was very slow, and the current round of prices was set bit by bit with very small trading volume. It pulled back to a new low, with almost no signs of recovery midway. Falling U.S. stock markets and lower prices for grains such as soybeans, corn and wheat further weighed on cotton prices.
Foreign analysts said that U.S. cotton is facing low export pressure from India and Africa, and the market has room to go lower because it encounters major resistance on the demand side. This round of price increases may also push Indian cotton stocks back to the market, which will further depress prices. Overall, the current cotton market lacks positive factors to push it higher, causing some traders to exit the market. However, weather in South America is supporting grains and should also support cotton. </p