If you look at the K-line chart of ICE cotton futures from a distance, there is no doubt that the price trend is upward. The low point was 50 cents in April last year, and the high point is where it is now.
The latest CFTC position report shows that fund long positions slightly reduced last week, with net sales of 2,104 lots and net long positions reduced to 68,429 lots.
On Tuesday, the U.S. dollar index fell again, and the downward trend in the K-line chart was very obvious. Traders expected the next target price to be 80.10, which was set in February 2018. On the same day, ICE futures continued Monday’s gains and closed sharply higher by more than 100 points. Several contracts hit all-time highs. The main March contract stood at the 80-cent mark, the highest price since December 2018.
On the one hand, this rise is due to the positive impact of the surge in corn and soybeans, and on the other hand, it is the strong support brought by the weakening US dollar. Nonetheless, the market will focus on the final certification of the election results by the U.S. Congress on Wednesday (January 6) and the Senate election results in Georgia. Regardless of the final results, U.S. agricultural policy will be affected.
At the same time, the market continues to look forward to this Thursday’s weekly U.S. cotton export report. If contracts continue to maintain rapid growth, it will provide preliminary guidance for cotton demand in 2021. In December 2020, U.S. cotton signed a total export contract of more than 1.4 million bales, and the recent continued decline of the U.S. dollar will further promote the export of U.S. cotton.
It should be noted that ICE futures have been rising for several days, and the overbought condition of the market also needs to be corrected. Nonetheless, according to the current situation, this does not mean that there will definitely be large-scale liquidation and selling of cotton prices. After all, the new year has just begun, and planting in the northern hemisphere will have to wait for several months. The trend of cotton prices in 2021 may be very interesting. </p
