On January 27, the cotton market recovered in early trading, but then began to weaken. The strengthening of the U.S. dollar and the sharp decline of the US Dow Jones Index made speculators very nervous. The current March contract is not far from last week’s high of 83.06 cents, but the longer the price stays at this top, the more and more the market will become convinced that this is indeed a top.
This Thursday’s weekly U.S. cotton export report is critical. The biggest concern now is whether the U.S. ban on Xinjiang cotton will affect China’s import of U.S. cotton. Last week, China basically made no new purchases and canceled some contracts. As the Spring Festival is getting closer, the outside world is very concerned about whether China will continue to purchase large amounts.
On the same day, the Federal Reserve decided to keep the current interest rates unchanged and the monthly bond purchase scale of 120 billion unchanged. This news caused the Dow Jones Index to plummet and the U.S. Dollar Index to rise. Judging from recent trends, the U.S. dollar index has shown signs of stabilizing and recovering, and pressure on commodity futures has begun to appear.
According to foreign analysis, investors have become more cautious due to the impact of the COVID-19 epidemic, and the US$1.9 trillion economic stimulus package has encountered strong opposition from the Republican Party. Analysts predict that in the end the plan may not be passed according to the original standards, but passed as a smaller plan, which will have a more obvious impact on the U.S. stock market and the dollar.
On January 27, ICE cotton futures closed moderately lower. The rise in the U.S. dollar, the sharp fall in U.S. stocks, and the fund’s end-of-month liquidation behavior caused prices to continue to correct. Traders are waiting for the weekly U.S. cotton export report to give new guidance. At the same time, this Friday’s CFTC position report will also show the fund’s attitude towards cotton positions. If it is still a net sell, traders may think that cotton prices will enter a deeper adjustment.
Technically, ICE futures are still overbought and have been rising for nearly 10 consecutive months. Market fundamentals have begun to show some signs of consumption, and new bullish signals are needed to continue rising. </p
