Last Friday (January 15th), ICE cotton futures fell slightly as traders closed their positions to make profits before the weekend (this Monday is Martin Luther King Jr. Day and ICE futures are closed for one day). It is true that in addition to the factors of the short holiday, the current political turmoil in the United States also makes traders cautious and dare not easily buy heavily before the holiday. Affected by the US holiday on Monday (January 15), this week’s US cotton export weekly report was postponed by one day.
Despite this, ICE futures rose by 1.11 cents, or 1.4%, in the week of January 11-15. The March contract continued to stand firm at 80 cents, mainly due to the continuous positive cotton fundamentals. On the one hand, It was the USDA’s January supply and demand forecast that brought the long-awaited positive factors, and on the other hand, the weekly US cotton export report was gratifying.
As of now, the volume of U.S. cotton contracts this year has reached 11.864 million bales, which is higher than the 11.626 million bales in the same period last year. It is also the highest level in the same period since 2020/11. It has completed 84% of the USDA forecast, which is high. 71% of the average for the same period in the past five years. While U.S. cotton exports are increasing, the U.S. dollar is depreciating, which is also a favorable factor for U.S. cotton exports.
On January 15, ICE futures contracts for this year fell slightly, while contracts for next year rose slightly. Traders are focused on the upcoming U.S. presidential inauguration. Currently, the situation in Washington, U.S.A. is extremely tense, with a fierce confrontation between the army and demonstrators. Under this situation, the financial market has also temporarily stopped. There is news that cotton spot traders have suspended the purchase of new flowers in 2020 before the inauguration of the U.S. President. However, the market still has high hopes for Biden’s fiscal stimulus policy after taking office. The US$1.9 trillion will definitely trigger commodity inflation and provide strong support for grain prices. Next month’s NCC intended cotton planting area is a big attraction.
At present, there are still many positive factors in the market, but when cotton prices will peak is also a concern. Whether it is cotton fundamental forecasts or macro factors, most of them have been digested in the market. Analysts believe that February’s intended area forecast and USDA’s supply and demand outlook for next year will set the tone for the later trend of cotton prices.
At the same time, despite the huge scale of the U.S. stimulus policy, there are questions about how far the dollar can fall. Foreign analysts believe that the U.S. dollar index will rebound in the first quarter of this year, which will have a negative impact on the U.S. dollar. The impact of cotton prices will be very prominent. If so, cotton prices may not be far from the top. </p
