Last week, international cotton prices rose again, driven by the fall of the US dollar, China’s large purchase of US cotton and the positive USDA monthly report. The ICE futures March contract rose 2.51 cents, or 3.5%.
Previously, the trend of ICE futures was weak, but the continued decline of the US dollar greatly stimulated foreign purchases, and China’s large number of contracts for US cotton also gave strong support to cotton prices. The latest weekly US cotton export report shows that in the week ending December 3, the net contract volume of upland cotton in the United States reached 403,000 bales, and China signed 159,000 bales.
The latest forecast from the US Department of Agriculture also stimulated higher cotton prices. Ending stocks fell sharply month-on-month as global production fell and consumption rose. Specifically, this year’s production in the United States decreased by nearly 20%, Brazil decreased by 10.8%, and Pakistan decreased by 27.4%. With the recovery of Pakistan’s textile production, its cotton imports will exceed 1 million tons, an increase of 64% in two years. China’s imports are expected to increase by 40% to 2.18 million tons, the highest since 2013/14. Bangladesh and Vietnam also continue to import on a large scale.
On December 14, the U.S. COVID-19 vaccine officially entered the vaccination process, making the market full of optimism about the recovery of cotton consumption. ICE futures continued to rise strongly, while last week’s positive USDA monthly report and U.S. cotton export weekly report are still lingering. The above situation Pushing ICE futures to a one-and-a-half-year high.
The USDA’s production report for this year has stopped being released, and the industry estimates that the new cotton harvest is 95% complete. Recently, the weather in the eastern United States has been wet and cold, which is unfavorable for the finishing work of new cotton. It takes about two more weeks for new cotton to be processed. Although the USDA has significantly reduced U.S. cotton production, Texas still believes that the USDA’s production forecast for the state is too high, and it is expected that it may continue to be reduced in the future.
The Federal Reserve will announce its latest monetary policy on Wednesday. The market does not expect the United States to raise interest rates, but the Federal Reserve will be concerned about growing inflationary pressure. The CFTC position report shows that funds sold a net 1,684 contracts in the week ending December 8, and the current net long position is 58,776 contracts.
The large-scale economic stimulus from the United States and the European Central Bank will also bring strong support to financial markets including cotton, and the demand recovery after the epidemic will bring benefits to the long-term trend of cotton. International cotton prices may fall in early 2012. rise further. Technically, as ICE futures continue to hit new highs, the current unilateral rise has lasted for nine months. In the long term, the price upward trend remains unchanged. The main contract is expected to reach 80 cents early next year and break through 75 cents in the short term. Or it will consolidate slightly. </p
