Last week (February 1-5), bullish expectations for the USDA supply and demand report, the US’s advancement of the US$1.9 trillion stimulus package and the rapid growth of US cotton exports ignited market enthusiasm and triggered a new round of speculation. The March contract Intraday prices were close to the 85 cent mark. As China enters the Spring Festival holiday this week, the market expects that U.S. cotton exports will converge in the next one or two weeks.
The market has high expectations for this week’s USDA supply and demand report. As of press time on February 8, ICE futures as a whole continued to rise strongly by more than 100 points. The advance hype for the supply and demand report continues, but it is also Beware of the risk that the benefits may materialize or fail to meet expectations. Regarding the NCC’s intention to plant cotton area announced on Friday night, the market generally expects that the US cotton area will decrease by 5-10% because other crops will seize the cotton area.
In addition to fundamentals, the US$1.9 trillion stimulus package in the United States will also bring good news to low- and middle-income groups in the United States and will be beneficial to long-term cotton consumption. The answer will be given in the end. In any case, the impact of the dollar depreciation and inflation on commodities will be obvious.
According to the analysis of a foreign research institution, speculative bulls have taken profits before and after last week’s surge in ICE futures, and have now prepared sufficient “ammunition” to continue speculation. From a technical point of view, the correction after last week’s surge has basically been in place and will now start to attack 90 cents. ICE futures may eventually rise to 95-96 cents.
As of the end of January, there are still 1.68 million unpriced ICE futures contracts in March, 2.66 million in May, and 3.5 million in July. Pricing transactions at textile mills are currently supporting the market. U.S. cotton expert Cleveland said that as U.S. cotton exports continue to increase rapidly, the current first impact point is 88 cents, but judging from the number of unpriced contracts, 90 cents is just around the corner. </p
