On March 9, ICE cotton futures fell sharply shortly after opening, and the market began to feel that the supply and demand forecast for the day might not meet psychological expectations. At the same time, the recent strong rebound of the US dollar has also had an adverse impact on US cotton exports.
At present, the number of unpriced ICE futures contracts is still very large, and sooner or later textile mills will have to buy futures to cover their short positions. Some traders believe that this will significantly increase cotton prices, which is certainly possible, but it is far from starting yet.
The cotton market experienced a strange day that day. It had already dropped 300 points before the USDA supply and demand forecast was released. Analysts believe that it may be fund selling and traders adjusting positions before the report, which caused the cotton price to finally fall to the limit. .
From a fundamental perspective, the USDA report is bullish. US cotton production this year was reduced by 150,000 bales, ending stocks also decreased by 100,000 bales, and global ending stocks also decreased by 1.16 million bales. Still, all this was to no avail, and the market sell-off was so intense that cotton prices were unable to fight back.
The U.S. futures brokerage company believes that compared with expectations, USDA data appears relatively mediocre. The decline in U.S. production and ending stocks is lower than market expectations, but it will not reach the limit. This is more like the fund’s Insist on selling. With cotton prices falling below the intraday trend line of 86.65 cents, it may trigger more technical selling. In the short term, the market is unlikely to hit previous highs.
Under the influence of the United States’ massive money printing, the commodity market should gain momentum again. The current decline is due to the timely profit-making behavior of funds. After experiencing this limit drop, the market urgently needs to see a positive stimulus for U.S. cotton exports. Technically, the overbought condition that began in October last year has been completely corrected. Of course, this cannot be considered a buy signal, but it is just missing a potential negative factor. </p
