ICE cotton futures continue to consolidate within a narrow range, as the market awaits the weekly U.S. cotton export report postponed to Friday and news that may have an impact on Sino-U.S. relations.
Foreign news said that China’s adoption of the Hong Kong regional security law may trigger a strong reaction from the United States. In addition, the first phase of the Sino-US agreement is being implemented, and there may be great variables in Sino-US relations in the near future. The deterioration in Sino-US relations may be reflected in the weekly report on US cotton exports. As time goes by, the market becomes increasingly worried about US cotton breaking the contract.
Weather forecasts show that temperatures in Texas, the Delta and the Southeast will be higher than normal and rainfall lower than normal in the next 6-10 days. As of last weekend, U.S. cotton sowing has just been halfway completed, which is the same as the same period in the past five years. However, the U.S. hurricane season is about to begin on June 1. While the market is paying attention to Sino-U.S. relations, it is also paying close attention to tropical storms in the Atlantic Ocean.
The U.S. economy continues to suffer from the adverse impact of the COVID-19 epidemic. A report released on Thursday stated that the number of people applying for unemployment assistance for the first time last week increased by 2.1 million, and sales of durable goods fell by 17% in the first quarter. Slightly higher than market expectations. What is puzzling is that with 30% of the US workforce unemployed, the Dow Jones Index is still above 25,000 points. What the market doesn’t know is whether the worst period for the U.S. economy has arrived.
Foreign people believe that the implementation of the first phase agreement between China and the United States, the new crown epidemic and Hong Kong issues are all uncertain factors in the cotton market. It is reported that China imported 3-4 cargoes of South American soybeans this week, but Trump’s tough attitude towards China is still making people nervous.
On May 28, under the influence of anxiety, the July ICE futures contract fell back and closed lower. The market is also worried that China will instead purchase cotton from other countries with more competitive prices. Analysts believe that China has been purchasing large amounts of cotton from Brazil, which is negative for the market. Rabobank said in a report that although the gradual stabilization of the new crown epidemic may promote an initial surge in cotton retail sales, the impact of the blockade on cotton will persist as consumer confidence drops to the level of the global financial crisis. </p
