On June 4, ICE cotton futures rose sharply. Last week, US cotton export signings and shipments increased month-on-month, and China continued to purchase large quantities.
From the perspective of contract signings, as of the week of May 27, the signing volume of upland cotton in the United States for 2020/21 increased by 6% month-on-month, an increase of 82% from the average of the previous four weeks. The contracting volume for next year There has been an increase, the shipment volume has increased significantly, and China’s contract volume has remained the same as the previous week. The good performance of US cotton exports has given the market strong confidence. So far, U.S. cotton exports have completed 103% of USDA’s forecast, and the average for the same period in the past five years is 106%.
It is worth noting that the recent high temperature and drought in Brazil have caused grain prices to skyrocket again, which has provided support to cotton prices. Data released that day showed that the United States added 559,000 non-farm jobs in May, lower than market expectations of 671,000. The market believes that the Federal Reserve’s interest rate hike is expected to be delayed, so the U.S. dollar index continues to fall, which is also positive for cotton prices.
Currently, soybean and corn prices have risen to eight-year highs. Coupled with the recent bad weather in the US cotton-producing areas, the market is increasingly expecting a significant reduction in the US cotton area. . The USDA estimates the U.S. cotton area to be 12 million acres, but some traders believe the actual area will be significantly lower than this level.
Analysts believe that as the epidemic blockade in various countries is lifted again, textile companies will usher in a wave of peak replenishment. Recently, various countries have begun to increase their replenishment for the third quarter and even next year. The trading volume of each variety has increased significantly, and there will be good support below the cotton price.
Technically, ICE futures began to gradually rise after holding on to 82 cents, and are expected to gradually climb to 88-90 cents in June. On June 10, U.S. time, the U.S. Department of Agriculture will release its global supply and demand forecast for June, and on June 30, it will release a more significant forecast of the actual sown area in the United States. The above data will provide clearer guidance for supply and demand in the next year. </p
