On June 30, the USDA’s actual sown area report was finally released. In 2020, the actual sown area of cotton in the United States was 12.18 million acres, a year-on-year decrease of 11.3%, which was significantly lower than the market expectation of 13.15 million acres. The intended area at the end of March was 13.7 million acres.
China Cotton Network pointed out in its market analysis on June 8 that the USDA’s substantial increase in consumption for next year is only the first step. The next step is to pay attention to the actual sown area report and weather speculation at the end of June. Although the USDA predicts that the intended cotton planting area in the United States this year will remain the same year-on-year, this has paved the way for subsequent reductions in the US cotton area.
Sure enough, the actual sowing area in the United States this year was much lower than market expectations, which directly stimulated ICE futures to rise by more than 100 points on June 30, regaining 60 cents and hitting a high in the past three weeks. At this point, cotton prices finally broke through upward after a period of sideways trading, and the shock rebound trend that began in April continued.
After the report is released, the market’s focus will immediately return to the weather. Weather forecasts show that the probability of precipitation in western and southern Texas in the United States is extremely low in the coming week. According to the latest seedling situation report, the rate of excellent and good new cotton in the United States is 41%, slightly higher than the 40% of the previous week. However, the rate of excellent and good cotton in Texas is only 21%, far lower than the 44% in the same period last year. The proportion of poor seedlings has increased from 40% to 40%. dropped to 36%.
While paying attention to the weather, cotton demand also has a continuing impact on market psychology. Although the current US cotton signing progress far exceeds USDA’s forecast, the market still needs a large number of continuous signings to maintain its fragile psychology. At present, the global epidemic is difficult to control, cotton inventories have reached record highs, clothing consumption is sluggish, and Sino-US relations are tense. These are all huge rocks weighing on cotton prices. The market still faces many challenges as it continues to recover.
U.S. futures analysts said that although the actual area of U.S. cotton sown is close to the real situation, it will take some time for consumption to recover. Last year, the U.S. cotton abandonment rate was very high. If this year’s abandonment rate returns to normal, U.S. cotton production will still exceed demand even if there is a drought in western Texas. The market should not be too optimistic about this. </p
