On February 23, the cotton market recovered from Tuesday’s sharp decline. The escalation of the crisis in Ukraine the day before caused a sharp decline in U.S. stock markets and industrial commodities, which had an impact on the cotton market.
On the same day, Ukraine warned its citizens to avoid traveling to Russia and to leave the country immediately if they were already there. The Ukrainian government later voted to impose sanctions on 351 Russian lawmakers and called up 50,000 reservists. Russian President Vladimir Putin said on Wednesday that Moscow was “always open” to diplomacy.
On the 23rd, ICE cotton futures closed higher, mainly driven by the strength of the external market. Chicago grain hit a high in the past decade. The triggers were drought in South America and tension in Ukraine, which all triggered further escalation of inflation. Traders said the market was really just moving sideways, waiting for developments in Russia and Ukraine.
On the same day, international oil prices recovered their intraday losses as the Ukrainian government may have been affected by Russian cyber attacks, and announced that Ukraine would enter a 30-day state of emergency from 0:00 on the 24th, requiring Ukrainian citizens in Russia to leave immediately. The Russian Embassy in Ukraine Embassy personnel in Kiev were also evacuated. Affected by this, the U.S. dollar index rose, driven by safe-haven demand.
This week’s U.S. cotton export weekly report was postponed to Friday due to Monday’s holiday. In addition, the U.S. Department of Agriculture will hold the 2022 Agricultural Outlook Forum this weekend, and the market expects that the U.S. cotton planting area will expand.
Judging from the current situation, cotton fundamentals remain stable and have solid support for prices. However, under the influence of the Ukraine issue, market trading remains cautious, and prices lack strong driving forces and factors for rising prices, and may maintain a stable trend in the short term.
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